U.S Industrial Production Disappoints

Factory production in the U.S. declined in February for a third consecutive month, signaling cutbacks in manufacturing will hold back economic growth this quarter.

The 0.2 percent decrease at manufacturers followed a 0.3 percent drop in January that was initially estimated as a gain, figures from the Federal Reserve in Washington showed Monday. Total industrial production, which also includes mines and power plants, climbed 0.1 percent, propelled by a record surge in utility use as temperatures plummeted.

Delays at West Coast ports have probably disrupted supplies, while sluggish growth in foreign markets and a rising dollar that makes American products more expensive may be crimping demand. U.S. consumer spending, supported by job and wage gains, will be needed to underpin activity at factories, which are often considered economic bellwethers.

“We’re in a soft patch,” said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who correctly forecast the increase in the overall production gauge. As the U.S. moves into the spring and the bottlenecks caused by the port strikes abate, “the manufacturing sector might perk up a little again. I don’t think too much of this current softness should be extrapolated forward.”

Another report Monday showed manufacturing in the New York region grew this month at a slower pace than projected.

Bloomberg

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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