Industrial production advanced 0.1% in February 2015 following January’s 0.3% decline. Manufacturing output retreated 0.2% in February, a third monthly drop, while mining production receded 2.5% mainly due to depressed coal mining as well as oil and gas well drilling and servicing. As lower winter temperatures ramped up demand for heating, utilities output surged 7.3%. Total industrial production in February 2015 was 3.5% below the same month in 2014, while capacity utilization edged down to 78.9%, which is 1.2% below its 1972 to 2014 average.
Following January’s downturn, the Purchasing Manager Index (PMI) for February decreased 0.6 ppts to 52.9%. A value above 50 signifies expansion in the manufacturing industry. The effects of the West Coast port slowdowns are still hindering supply chain logistics while adding costs such as labor overtime and air freight. Furthermore, historically low oil prices continue to benefit certain industries, while oil and gas companies are cutting capital expenditures. February’s PMI reflects growth in 12 of 18 manufacturing industries including primary metals; fabricated metal products; electrical equipment, appliances & components; transportation equipment; chemical products; and machinery.
The Consumer Confidence Index declined in February 2015 to 96.4 following January’s steep climb. Consumers’ attitudes on overall current economic conditions have remained optimistic while the short-term outlook has worsened. The perception of the labor market has also dimmed some, and expectations regarding income are negative, with more people expecting salary cuts and fewer anticipating raises.
New orders for manufactured durable goods in January 2015 were up 2.8% or $6.5 billion to $236.3 billion after two monthly declines. New orders for transportation equipment in January drove the increase, rising 9.7% or $6.4 billion to $72.6 billion. January’s shipments of manufactured durable goods slid 1.0% or $2.5 billion to $245.4 billion.
Per the second estimate, real Gross Domestic Product (GDP) increased at an annual rate of 2.2% in Q4 2014, compared to 5.0% in Q3 2014. Q4 2014 gains were attributed to advances in personal consumption expenditures, private inventory investment, exports, nonresidential/residential fixed investment and state and local government spending. The slowing rate of real GDP growth was due to mounted imports, declines in federal government spending and decelerated growth in nonresidential fixed investment and exports.
In February 2015, the chemical and allied products PPI decreased to 266.5 from January’s reading of 268.0.