U.S Manufacturing Output Rises

Strong demand for machinery and steel led U.S. factories to increase production in February, according to Federal Reserve data that suggested a manufacturing slowdown could be easing.

Data released on Wednesday showed U.S. factory output rose 0.2 percent last month, which was a little stronger than the 0.1 percent gain expected by economists in a Reuters poll.

Overall industrial output fell 0.5 percent during the month, dragged lower by sagging oil production and a drop in utilities output.

Manufacturing makes up roughly a tenth of the U.S. economy and has cooled over the last year, hit by slower overseas demand and several months of dollar appreciation. A steep decline in oil prices also hit the U.S. energy sector, reducing demand in some factories.

But the dollar has weakened recently and the outlook for U.S. domestic demand has improved due to robust job growth. On Wednesday, the dollar was nearly 3 percent weaker against a basket of currencies .DXY on a year-over-year basis.

In February, U.S. output of goods meant to last at least six months rose 0.4 percent, led by gains in output of primary metals and machinery.

Economists polled by Reuters had forecast overall industrial production falling 0.3 percent last month.

The utilities index fell 4 percent after surging 4.2 percent a month earlier.

With output on the rise, the percentage of industrial capacity in use fell to 76.7 last month from 77.1 in January.

The Fed views capacity use as a leading indicator in deciding how much further the economy can grow before sparking higher inflation.

Forex heatmap

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell