(Bloomberg) — Production at U.S. factories rose in February by the most in four months, indicating firmer momentum in a manufacturing sector still challenged by supply constraints and higher costs.
The 1.2% increase followed a revised 0.1% gain in January, Federal Reserve data showed Thursday. Total industrial production, which also includes mining and utility output, rose 0.5% last month.
Factories were also able to ramp up capacity after weathering omicron-related challenges in recent months. Capacity utilization at factories rose in February to 78%, the highest since 2018, from 77.1% a month earlier.
A steady inflow of orders — a reflection of steady demand from businesses and consumers — remains a source of strength for domestic producers. At the same time, still-fragile global supply chains and soaring materials costs continue to complicate the industrial recovery.
The pickup in manufacturing output was broad-based in February, save for a drop in production of motor vehicles and parts. The Fed said that the 3.5% decline reflected ongoing shortages of electronics components. Excluding autos and parts, factory output advanced 1.5%.
Broad Strength
Factory production last month was boosted by stronger output of mineral products, wood, aerospace equipment, apparel and furniture. The Fed’s report also showed production of business equipment increased 1.9%, the most since July.
The median estimate in a Bloomberg survey of economists called for a 1% monthly advance in factory output and a 0.5% increase in total industrial production.
Total industrial production was restrained by a 2.7% decline at utilities, reflecting a return to more seasonable weather after a colder January. Mining output climbed 0.1%. Total capacity climbed to a an almost three-year high of 77.6%.
The latest Institute for Supply Management figures showed stronger factory activity in February on firmer growth in orders and production. The report also highlighted lingering logistical challenges as average lead times for production materials, supplies and capital equipment set record highs.
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