The numbers: Industrial production in March rose 0.5%, the Federal Reserve reported Tuesday. Economists polled by MarketWatch had forecast a 0.4% gain. Production is estimated to have risen at an annual 4.5% rate in the first quarter, down from a blistering 7.8% pace in the final three months of the year.
Capacity utilization rose to 78% in March from 77.7%, the highest rate in three years. Over the past 12 months, production has climbed 4.3%.
What happened: Headline production looked better than manufacturing alone in March. Output at factories rose only 0.1% after a red-hot 1.5% gain in February. The reason for the stronger 0.5% gain in overall production was continued oil and gas production and a surge in utility output from colder weather.
Auto production rose 2.7% in March as auto assemblies moved up to 12 million units at an annual rate, their highest level since December 2016. Excluding auto production, manufacturing slipped 0.1% in March.
Big picture: The U.S. manufacturing sector remains in healthy shape, although there is concern over possible trade barriers is causing factory owners to pull back. The latest Empire State index for April showed a steep drop in sentiment that many tied to concerns over trade.
What they are saying?: “Almost nothing seems to stand in the way of a banner 2018 beyond the fact that the motor vehicle sales revival is a bit long in the tooth and no one knows how the global trade tensions will shake out in the near term; so far, the back and forth in trade moves and counter-moves is fairly modest,” said Michael Montgomery, IHS Markit associate director for U.S. economics.
Market reaction: U.S. stocks
rose in early trade, as traders were optimistic about first-quarter earnings.