Diane Swonk, Chief Economist
Mar. 15, 2010 – 8:35 a.m. CT
Production Continued to Regain Ground in February
Industrial production increased 0.1% in February after surging 0.9% in January. Moderately strong gains in business, defense and construction supplies helped to offset a substantial decline in vehicle production. Toyota, in particular, cut back on its production in February.
Production across utilities also surged, reflecting people turning up their heat in the face of unusually bad winter weather, particularly in the south.
Mining output also rose in response to somewhat higher commodity prices. This will eventually feed into increased investment in new equipment.
Capacity usage crept up to 72.7%, which is up over January as well as a year ago, but still exceedingly low and more consistent with recession than recovery levels.
The Bottom Line: The recovery, which began in response to government stimulus, is beginning to spread to the business sector – welcome news given the slowdown in government stimulus. Any way the data is cut, however, the recovery remains muted and subpar. The Federal Open Market Committee will vote to keep interest rates low and its language regarding monetary policy unchanged, when it meets tomorrow.
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