Industrial production in March 2016 decreased by 0.6 percentage points (ppts) for the second consecutive month. Manufacturing output fell 0.3 ppts while the utilities index slumped 1.1 ppts. Mining slid 3.1 ppts and is down 12.9 ppts year-over-year. Total industrial production was 2.0 ppts below March 2015’s average and industrial capacity utilization decreased 0.5 ppts to 74.8%, a rate that is 5.2 ppts below its 1972 to 2015 average.
The Purchasing Managers' Index (PMI) improved by 2.3 ppts in March to 51.8%. A value above 50% signifies expansion in the manufacturing industry, with March’s reading marking the first positive sentiment in six months. March’s PMI reflects growth in 12 of 18 industries including miscellaneous manufacturing; machinery; fabricated metal products; primary metals; chemical products; and plastics & rubber products. The five industries reporting a decrease include transportation equipment; electrical equipment, appliances & components; and petroleum & coal products. Respondents noted strong demand and healthy backlogs marking the outlook for 2016.
The Consumer Confidence Index rose to 96.2 in March 2016, from 94.0 in February. Although the index improved, consumer sentiment is mixed regarding current business conditions, labor and income. There is some optimism for the coming six months, particularly for the labor market.
New orders for manufactured durable goods in March 2016 increased by 0.8% or $1.8 billion to $230.7 billion. This follows a 3.1% increase in February. March’s shipments of manufactured durable goods fell 0.5% or $1.1 billion to $237.0 billion, subsequent to February’s 1.0% decrease. Shipments have been down three of the last four months including shipments of transportation equipment which dropped 1.8% or $1.4 billion to $77.5 billion between February and March.
Per the advance estimate, real Gross Domestic Product (GDP) grew at an annual rate of 0.5% in Q1 2016, versus 1.4% growth in Q4 2015. The Q1 increase reflected positive contributions from personal consumption expenditures, residential fixed investment and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports and federal government spending. Imports, a detractor from GDP, increased.
In March 2016, the chemical and allied products PPI decreased to 260.2 from February’s reading of 261.1.