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TwitterThe Federal Reserve Statistical Release today posted a net increase of 0.1 percent in the industrial production in February marking an eight monthly increase and beating not just winter storms but also analyst expectations.
The catch however, is the fact that the key sector, the manufacturing sector, which is also the index’s largest component, fell 0.2%; while output at mining companies and utilities increased 2.0% and 0.6%, respectively. The manufacturing sector ebbed probably due to the winter storms which shut down a major part of the Northeast in February. “Production was likely held down somewhat by winter storms in the Northeast,” the Fed said in the release. This had the trickledown effect of reducing working hours, earnings and purchasing power. Also, the slump in auto sector due to the recent recalls at the Toyota Motor Corp. also contributed to the fall. At the same time, the storms increased the demand for energy, which in turn boosted the demand for mining and utility production.
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