Industrial Production Up 0.4 Percent, Biggest Rise in 18 Months

In the most dramatic sign yet that the manufacturing sector is on the road to recovery, industrial production for February rose by 0.4 percent, posting its biggest advance in more than 18 months.

The bigger-than-expected 0.4 percent increase in output at the nation's factories, mines and utilities followed a revised 0.2 percent gain in January, which had been previously reported as a 0.1 percent decline. The 0.4 percent gain was the largest since June 2000, when output rose by the same amount.

The latest snapshot of industrial activity provides the clearest signal yet that the manufacturing sector is pulling out of a long slump that had forced factories to sharply cut production and let thousands of workers go.

The manufacturing sector alone, the largest component in the report, saw a production gain of 0.3 percent, the same as the revised January figure for the sector.

The report also showed an increase in the amount of productive capacity in use at U.S. firms. The capacity use rate in February was 74.8 percent, up from a revised 74.5 percent in January and the highest since October 2001.

Analysts polled by Reuters had expected a slightly softer report. The average forecast in a survey of analysts called for a 0.3 percent gain in output while capacity use was expected to rise to only 74.3 percent.

Reuters and the Associated Press contributed to this report.