WASHINGTON – The nation's industrial sector was humming in March, with production at factories, mines and utilities rising by 0.6 percent.
The solid performance in overall industrial production, reported by the Federal Reserve on Friday, suggests that the economy was heading into the spring with decent momentum.
The increase registered in industrial activity in March followed a 0.5 percent rise in February and was the largest since December. The showing was better than economists were expecting.
The strength in March was broad-based. Machinery, consumer appliances, furniture and carpeting, and business equipment all posted production gains. Even the struggling automotive sector saw some improvement. That swamped some weakness in home electronics, textiles and elsewhere.
Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, a research group, said the report shows that the "strong industrial rebound that began last fall has momentum."
Economists believe economic growth for the January-March quarter will clock in at a brisk pace of 4.5 percent or higher. The government will release first-quarter figures at the end of the month.
In the current April-to-June quarter, the economy is expected to moderate to a pace in the range of 3 percent, which would still represent good growth, analysts said.
With the economy chugging ahead at a solid clip, the Federal Reserve and other economists are being especially watchful for any signs that inflation may flare up.
The Federal Reserve boosted a key interest rate to a five-year high on March 28, the latest in a series of rate-raising moves since June 2004 to keep inflation in check. Analysts expect another rate increase on May 10, the Fed's next meeting.
Friday's report showed that manufacturing production rebounded in March, rising by 0.5 percent. That marked an improvement from the 0.1 percent dip registered in February, a weak performance that analysts believed at that time was a temporary soft spot.
Output at mines rose by 0.9 percent in March, after dropping 0.7 percent in February.
Production at gas and electric utilities — which had gyrated wildly in January and February because of unusual weather — posted a 0.5 percent increase in March.
The report also showed that the proportion of overall industrial capacity in use rose in March to 81.3, the highest since September 2000.
Economists look at this capacity utilization figure for clues about the future inflation climate. For instance, if plants were running at full tilt and couldn't crank out enough goods to satisfy customers' demand, then there could be a run up in prices.