Stall in US production as Fed meets on rates

City A.M. Reporter
US industrial production braked sharply in February, held back by severe winter storms that slammed parts of the country, while manufacturing activity in New York state stalled this month, figures showed yesterday.

Analysts said the data did not alter their views that the factory-led economic recovery remained on track, given weather disruptions and the fact that details of the reports showed underlying strength. They expect a rebound in industrial production in March.

The reports come ahead of a Federal Reserve meeting on interest rates today. The US central bank is expected to hold overnight interest rates in a range of zero to 0.25 per cent and maintain a pledge to keep them ultra-low for an “extended period” to nurture the recovery.

While US manufacturing output fell in February, it rose outside of the car industry, and mining activity posted a strong gain, leading overall industrial output to rise slightly. In addition, factory employment, shipments and unfilled orders in New York state all rose this month.

The Federal Reserve said industrial output edged up 0.1 per cent last month after increasing 0.9 per cent in January, in line with market expectations. They blamed the slowdown on bad weather. Although February’s snowstorms affected industrial output, they had a minimal effect on retail sales.

The report also showed the amount of the nation’s industrial capacity in use hit the highest level in more than a year. Manufacturing has led the economy out of the most severe downturn since the 1930s.