WASHINGTON – U.S. manufacturing production increased more than expected in February, driven by a rise in motor vehicle output, according to data from the Federal Reserve released on Tuesday.
Factory output rose 0.9% last month following a revised 0.1% increase in January. Economists polled by Reuters had forecast a 0.3% rebound after the previously reported 0.1% decline. On a year-over-year basis, manufacturing production grew 0.7%.
The manufacturing sector, which accounts for 10.3% of the U.S. economy, has been gradually recovering amid changes in interest rate policies. The Federal Reserve is expected to keep its benchmark interest rate in the 4.25%-4.50% range during its upcoming decision, following a 100-basis point reduction since September.
Motor vehicle and parts production led the gains, surging 8.5% after two months of declines. Durable goods manufacturing increased 1.6%, supported by stronger output across various long-lasting goods. Nondurable manufacturing saw a 0.2% rise, as gains in chemical production offset declines in food, beverage, and tobacco products.
Mining output rebounded 2.8% after a 3.2% decline in January, while utilities production fell 2.5% due to lower heating demand amid rising temperatures. In January, utilities production had increased 6.1% due to colder weather.
Overall industrial production rose 0.7% in February, following a 0.3% increase in January. Compared to a year ago, industrial output grew 1.4%.
Capacity utilization in the industrial sector, which measures how fully firms are using their resources, increased to 78.2% from 77.7% in January. The manufacturing sector’s operating rate rose 0.6 percentage points to 77.0%, remaining 1.2 percentage points below its long-term average.
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