Industrial Production Up 0.6%

Washington, DC, April 14, 2006–The output of the nation’s factories, mines and utilities increased 0.6% in March, the best gain since December, the Federal Reserve said Friday.

Capacity utilization, a key gauge of inflationary pressures, rose to 81.3%, the highest since September 2000.

Industrial production increased at a 4.5% annual rate in the first quarter as the economy continued to recover from the devastating hurricanes last summer.

Industrial production was revised lower in January and February by a cumulative 0.3 percentage points. February’s gain was revised to 0.5% from 0.7%.

Capacity utilization in February was revised lower to 81.0% from 81.2%.

Economists were looking for March output to rise 0.4% and expected capacity utilization to rise to 81.4%.
With the revisions, the March figures are slightly below expectations.

The Federal Reserve is watching “resource utilization” figures closely for signs of inflationary pressures on the supply-side of the economy. If demand were to consistently outpace supply, inflation would result.

Capacity utilization rates are now 0.3% above long-term averages for total industry and 0.6% above the long-term average in manufacturing, sparking some concern that inflationary pressures could rise.

Industrial production has increased 3.6% in the past year. The capacity of the nation’s industrial sector has grown 1.8%.

In March, manufacturing output increased 0.5%. Factory output is up 4.8% in the past year.

Mining output increased 0.9%, as oil and gas production in the Gulf came back on line and coal production increased.

Utility output increased 0.5%.

Output of business equipment increased 0.8% in March and is up 10.9% in the past year. Output of consumer goods increased 0.5% and is up 1.9% in the past year.

Within manufacturing, auto production increased 1.5%. Vehicle assemblies rose to a seasonally adjusted annual rate of 11.71 million from 11.45 million in February.

Excluding motor vehicles, manufacturing output increased 0.5%.

Output of high-technology industries increased 2.7% and is now up 23.2% in the past year. Semiconductor production increased 3.5%, communication equipment increased 2.2% and computers increased 0.4%.

Excluding high-tech, manufacturing output rose 0.4%