February Production Data Mixed

Date: March 18, 2016

Industrial Production Declines, But Manufacturing Production Rises

According to the latest Federal Reserve data, February was a mixed month for production, with industrial production down a seasonally adjusted 0.5 percent in February after rising 0.8 percent in January. The Wall Street Journal reports that total production in February was down 1.0 percent compared to the same month in 2015, marking the fourth straight year of declines. However, manufacturing production rose for the second straight month, climbing 0.2 percent in February after rising 0.5 percent in January. The AP reports US factory production rose again last month in “a sign manufacturing may be stabilizing after a difficult year.” The AP adds that other areas of industrial production dropped, with utility production falling 4 percent “as mild temperatures lowered demand for heat” and “mining output, which includes oil and gas drilling, fell 1.4 percent, a result of low oil prices.” According to Bloomberg News, a survey of economists had projected manufacturing output to rise 0.1 percent and total industrial production to drop 0.3 percent. The article states “American factories might be catching a break from a modest climb in energy prices even as they battle dollar appreciation in a bid to regain momentum after months of malaise.” A separate analysis by Bloomberg News states that the economic data suggests “Manufacturing finally seems to be finding its footing” as factories “cranked out more business equipment…as well as consumer durable goods.”

What This Means For Small Businesses

Small businesses are growing weary of the mixed messages the federal government has been sending in its fiscal policies, and this disillusion is leading to a decline in optimism about the state of the US economy as a whole. When commenting on the results of the latest Small Business Economic Report, NFIB Chief Economist Bill Dunkelberg explained that current Fed economic policy coupled with an uncertain outcome in November’s presidential election are among the key reasons that “expectations for future business conditions remained very negative, certainly not supportive of significant increases in hiring or capital spending.”

Additional Reading

Reuters also reports on the Fed’s latest production data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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