(RTTNews) - With mining output showing a notable increase, the Federal Reserve released a report Monday morning showing a modest increase in industrial production in the month of February. The report also showed a slight uptick in capacity utilization. The report showed that industrial production edged up by 0.1 percent in February following an unrevised 0.9 percent increase in January. The modest increase came as a slight surprise to economists, who had expected production to be unchanged compared to the previous month.
A jump in mining output contributed to the unexpected increase in industrial production, with mining output surging up by 2.0 percent in February following a 1.1 percent increase in January.
Utilities output showed a more modest 0.5 percent increase in February, as an increase in electric utilities more than offset a decline in natural gas utilities. The increase in utilities output followed a 0.6 percent increase in the previous month.
On the other hand, the report showed that manufacturing output edged down by 0.2 percent in February after rising by 0.9 percent in January. The modest decrease was partly due to a 4.4 percent drop in motor vehicle production. Peter Boockvar, equity strategist for Miller Tabak, said, "With lean inventories as seen in last week's data, producers just need some more confidence that end demand will see sustainable growth in order to further pick up production and get us to a self sustaining recovery."
"While there are some signs of it, the inconsistencies in them with still major debt overhangs apparent are combining to create the lumpiness in the recovery," he added.
Meanwhile, the Federal Reserve said that capacity utilization rose to 72.7 percent in February from a revised 72.5 percent in the previous month. Economists had expected capacity utilization to slip to 72.5 percent compared to the 72.6 percent originally reported for January.
The uptick in capacity utilization came reflected modest increases in capacity utilization in the manufacturing and mining sectors, which edged up to 86.2 percent and 69.6 percent, respectively. Capacity utilization in the utilities sector slipped to 70.8 percent in February from 71.0 in January.
by RTT Staff Writer
