New York, NY, Apr. 16--Industrial production declined in March, led by a sharp slowdown in utilities output.
Output from the nation's factories, mines and utilities dropped 0.2% last month, the Federal Reserve said Friday. The decline, the largest since April 2003, marked the first time since August that production fell. Output rose a revised 0.8% in February. Capacity use slid to 76.5% from a revised 76.7% in February.
Economists had expected production to rise by a modest 0.4%, held down by weak data on hours worked by manufacturing employees, and for capacity use to come in at 76.8%, according to a survey by Dow Jones Newswires and CNBC.
"The entire drop in output was due to a 2.3% decline in utility output, reflecting less severe winter weather than in January and February," wrote Ian Shepherdson, chief U.S. economist at High Frequency economics, in a note to clients.
The 2.3% drop in utilities output was the biggest drop for the sector in a year; capacity use in the sector eased more than two percentage points to 84%.
Manufacturing production was unchanged in March, making it the one of the only major categories that didn't post an outright drop. Capacity use in the sector fell slightly to 75.2%.
Manufacturers generally have been upbeat about their prospects this year. The sector has shown strong growth recently as it has emerged from a long slump that was at the heart of the 2001 U.S. economic recession.
Output in the mining industry skidded 0.3%; capacity use fell to 85.4%.
Construction was a rare bright spot in the report. Construction-supplies production rose 0.6%.
But production of cars and parts fell 2.2%, and production of consumer durable goods, items such as appliances that are meant to last three years or more, dropped 0.5%.
Business-equipment production declined 0.2%. But the technology industry saw production rise 1.4%, on top of the previous months' 3.4% increase.
Semiconductor production jumped 2.5% and output of computers and office equipment rose 2.4%. But production of communications equipment slipped 2%.
