The 0.1% m/m rise in industrial production in Feb (consensus +0.3%) was distorted both downwards and upwards by the unusually severe winter weather. The 0.2% m/m fall in manufacturing output was probably partly because the weather prevented some workers from getting to the factories. The 7.3% m/m rise in utility output, which was the largest monthly gain since the early 1970s, was also due to the unusually cold weather which forced households to turn up the heating.Capital Economics notes in a report on Monday:
- These distortions will be reversed once temperatures return to normal, with manufacturing output rebounding and utility output falling back. The drag on production from the 2.5% m/m fall in mining output, however, is here to stay. In fact, even larger falls probably lie ahead.
- February’s industrial production figures continue the recent run of weak news on the US economy and may make some Fed officials more inclined to keep interest rates on hold for longer.
- Nonetheless, we still think the Fed will signal that rates are likely to rise in June by dropping the term “patient” from its policy statement on Wednesday.
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