“Weather volatility aside, the monthly report on industrial production suggests that U.S. manufacturing is maintaining its path of moderate growth,” said Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). “The Federal Reserve reported that total industrial production (consisting of manufacturing, mining, and utilities) grew 0.7 percent during March. Manufacturing, which accounts for the lion’s share of total industrial production, grew a healthy 0.5 percent. While this is significantly slower than the 1.4 percent growth seen in February, weather-related distortions are clearly affecting these recent numbers. During the first quarter of 2014, manufacturing production grew 4.4 percent, modestly slower than the 4.8 percent seen in the fourth quarter of 2013.
“The breadth of manufacturing growth in March is suggestive of a moderate but durable factory sector recovery coming out of a difficult winter,” he added. “Nondurables, normally weaker than durables, saw output growth of 0.7 percent during March, while durable manufacturing growth was 0.5 percent. Notable strength in textile, apparel, and paper output growth came after significant contractions in the prior two months. Performance in March was well balanced between consumer goods output, which saw 0.7 percent growth and business equipment production, which rose by 0.5 percent.
“The U.S. manufacturing sector should benefit from the continued moderate growth of the U.S. economy,” Waldman concluded. “The global picture, however, presents somewhat of a risk with an uncertain slowdown in China, a troubled outlook for the developing world as a whole, and a growing deflation risk that could threaten the weak rebound in the Eurozone. The two key demand drivers for U.S. factories — exports and business investment — are likely subject to modest downside risks this year. But the overall strength of U.S. and global goods demand should be sufficient to keep U.S. manufacturing humming, if not booming.”