Industrial Production Flat In February After Flat January

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Industrial Production Flat In February After Flat January

The Federal Reserve today released their report on Industrial Production for the month of February. The statistics showed no growth in production. Analysts had expected an increase of around 0.4%. January’s numbers had surprised analysts, giving flat growth for that month. December’s numbers had seen a better than expected 1% increase in Industrial Production. This report show the level of production in the mining, manufacturing, electrical and gas industries. Industrial production remains a driver of growth in the US economy. This sector employs a large number of people and has been one of the fastest to show recovery.

Although the initial numbers reported for January appeared disappointing buried within the report there was a lot of positive news. During that period manufacturing had actually increased by 0.7%. The flattening of the industry’s growth was mainly due to the unusually warm weather that January brought, leading to lower demand for heating and lighting, reducing the electrical and gas components of this report. Manufacturing is the most important part of this report in most analyst’s eyes. The numbers increased by 0.3% in February. Movements in utilities tend to be cyclical and mining remains stable in the long term. Manufacturing increases are used as an indicator of the recovery of the economy. The manufacturing numbers are on a run of increases since a small decrease in November.

The increases in manufacturing numbers in the past months have gone hand in hand with other economic indicators which are showing a recovery in the United States economy and the markets. Employment and consumer confidence are on the rise while volatility is down on the markets. The mix of positibe data was complimented by the Fed’s outlook on the economy released earlier this week. The statement was cautious but positive on the future of the economy in the coming months.

Challenges continue to exist however. The jump in the CPI recorded this morning of 0.4% will drive speculation that the Economy may be under threat from inflation. The CPI has increased by 2.9% in the past twelve months. Energy price increases have been blamed for the rise. 3.2% is the figure put on the increase in energy prices owing to instsability in the supply from the middle east. The continued growth of the manufacturing sector should help to drive growth. Many analysts have begun to see manufacturing as key in leaving the recession behind.

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