Back
15 Apr 2015
US: production disappoints again, led by utilities – KBC
FXStreet (Barcelona) - The KBC Bank Research Team reviews the US Industrial Production data release, noting that the drop in utilities led the fall in production growth to 2.05%, and further expects the production to rebound in coming months as weather conditions improve and impact of strong USD fades.
Key Quotes
“US industrial production continued to surprise on the downside of expectations in March. Output dropped by 0.6% M/M, twice as much as expected. Annually, production growth slowed to 2.05% Y/Y, down from 3.56% Y/Y in February and the lowest level since July 2013.”
“The details show however that the downward surprise was mainly based in utilities, which dropped by 5.9% M/M. Also mining output dropped further in March, by 0.7% M/M, posting its third consecutive decline.”
“Manufacturing production however came out in line with expectations, picking up marginally in March (0.1% M/M). This was however only due to a rebound in production of motor vehicles and parts (3.2% M/M). Excluding this category, manufacturing production was down by 0.1% M/M.”
“Capacity utilization dropped for a fourth straight month in March and the decline was bigger than expected (from 79% to 78.4%).”
“Although the downward surprise was mainly based in utilities, also the details remain poor. Manufacturing production rose only marginally following two consecutive monthly declines and capacity utilization extended its downward trend.”
“While weather conditions are probably partly responsible for the recent weakness, also the stronger dollar is hurting US firms. We hope to see production rebounding in the coming months as weather conditions improve and the impact of the stronger dollar might fade.”
Key Quotes
“US industrial production continued to surprise on the downside of expectations in March. Output dropped by 0.6% M/M, twice as much as expected. Annually, production growth slowed to 2.05% Y/Y, down from 3.56% Y/Y in February and the lowest level since July 2013.”
“The details show however that the downward surprise was mainly based in utilities, which dropped by 5.9% M/M. Also mining output dropped further in March, by 0.7% M/M, posting its third consecutive decline.”
“Manufacturing production however came out in line with expectations, picking up marginally in March (0.1% M/M). This was however only due to a rebound in production of motor vehicles and parts (3.2% M/M). Excluding this category, manufacturing production was down by 0.1% M/M.”
“Capacity utilization dropped for a fourth straight month in March and the decline was bigger than expected (from 79% to 78.4%).”
“Although the downward surprise was mainly based in utilities, also the details remain poor. Manufacturing production rose only marginally following two consecutive monthly declines and capacity utilization extended its downward trend.”
“While weather conditions are probably partly responsible for the recent weakness, also the stronger dollar is hurting US firms. We hope to see production rebounding in the coming months as weather conditions improve and the impact of the stronger dollar might fade.”