U.S. manufacturing production unexpectedly shrinks in Feb.

UNTIED STATES manufacturing output fell 0.4 percent in February. / BLOOMBERG NEWS FILE PHOTO/TY WRIGHT
UNTIED STATES manufacturing output fell 0.4 percent in February. / BLOOMBERG NEWS FILE PHOTO/TY WRIGHT

NEW YORK – United States factory production slumped for a second month in February, missing forecasts for a pickup, indicating headwinds from the trade war to slower global growth are weighing on manufacturers. Still, the prior month’s drop was revised up.

Manufacturing output fell 0.4 percent after a revised 0.5 percent decline in the prior month, Federal Reserve data showed Friday. The results missed the estimate for a 0.1 percent rise in a Bloomberg survey. Total  industrial production, which also includes mines and utilities, rose 0.1 percent after a revised 0.4 percent decrease that was also upwardly revised.

Key insights

The results indicate headwinds for manufacturing persist as producers confront uncertainty from trade policy and dimmer projections for major economies from China to Europe. Economists project the U.S. economy will slow in each quarter this year. The data echo other downbeat reports on the sector. The Institute for Supply Management’s gauge of U.S. factories fell to a two-year low in February in a broad decline across orders, employment, production and deliveries. A separate report earlier Friday showed the New York Fed’s measure of general business conditions fell to the lowest since May 2017. The report showed mixed results across market groups, with increases for materials, business supplies, and defense and space equipment, along with decreases for consumer goods, business equipment and construction supplies. Production of motor vehicles and parts decreased 0.1 percent.

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Capacity utilization, measuring the amount of a plant that is in use, edged down to 78.2 percent from 78.3 percent. Utility output rose 3.7 percent after declining 0.9 percent the prior month. Mining production rose 0.3 percent for the second straight month. Machinery production slipped 1.9 percent, while output of consumer goods was down 0.1 percent, and business-equipment production fell 1 percent. The Fed’s monthly data are volatile and often revised. Manufacturing, which makes up about 75 percent of total industrial production, accounts for about 12 percent of the U.S. economy.

Jeff Kearns is a reporter for Bloomberg News.