U.S. March Industrial Production - Strong Q1 ahead of tariffs
March industrial production is weak overall with a 0.3% decline though the fall is more than fully explained by a steep 5.8% fall in utilities as weather improved. Manufacturing increased by 0.3%, sustaining a recent improvement in trend that will be difficult to sustain as tariffs kick in.
Utilities saw strong gains of over 4.0% in both December and January with the latest decline extending a 1.5% fall in February. January was unusually cold but March was unusually mild. Mining was also firmer, up by 0.6%, extending February’s 1.7% bounce after a 2.2% fall in January.
Manufacturing rose by 0.3% after a 1.0% rise in February, while manufacturing ex autos also rose by 0.3% after two straight gains of 0.5%. Industrial production saw a strong 5.5% annualized rise in Q1 with manufacturing up by 5.1%.
The acceleration in Q1 follows improvement in the ISM manufacturing index, but that peaked in January and has since slipped back. Some of the strength may be an attempt to beat tariffs, both on imported supplies and potential retaliation in export markets. Q2 data may prove weaker.
