NEW YORK (Reuters) - Industrial production was unchanged in February as a sharp drop in mining output offset a third straight monthly gain in factory production, the Federal Reserve said on Friday.
JACK DE GAN, CHIEF INVESTMENT OFFICER AT HARBOR ADVISORY CORP IN PORTSMOUTH, NEW HAMPSHIRE
“On a month-to-month basis those numbers can be quite volatile. You really have to look at it over a long period of time...The general direction of most economic inputs -- and the high frequency ones like jobless claims and Empire State manufacturing -- have all been trending higher.”
“It is disappointing. There was a big upward revision to January. That sort of makes it tough to read too much into it. It does seem to show that the underlying trends are that you are really not seeing much momentum attached to these. This is really suggesting what was in the payrolls report, that productivity is taking a hit in the first quarter. Output is fairly mild to moderate while we are getting respectable gains in employment at this point, so this is something that is going to have to break one direction or the other.”
RAVI BHARADWAJ, MARKET ANALYST, WESTERN UNION BUSINESS SOLUTIONS, WASHINGTON, D.C.
“I think the industrial output itself is less relevant than the capacity utilization. The higher capacity utilization goes the less slack there is the economy and the more inflationary pressures we might be seeing within the standard supply chain. That’s probably more disconcerting and more indicative of future Federal Reserve policy. It’s uncertain whether or not this can be done by future increases in productivity, and productivity is very difficult to forecast. We would have to wait and see what progresses.”
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
“February industrial production was unchanged, well below a consensus for a 0.4% increase. However, January was revised up to a 0.4% increase from unchanged, meaning the capacity utilization outcome of 78.7% was only marginally below a 78.8% market expectation, with January revised up to 78.8% from 78.5%. While January’s revision may offset February’s surprise, there were marginal downward revisions to October and December industrial production (each by 0.1%). Still, the number net of revisions is only marginally below expectations and the manufacturing picture looks stronger than the industrial production headlines, with December manufacturing output up by 0.3% and January’s gain revised up to an impressive 1.1% from 0.7%, and here with no revisions further back.”
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