Industrial output rises 0.3 percent in March

Friday, April 15, 2005 | 9:51 a.m.

WASHINGTON -- Output at the nation's factories, mines and utilities rose by 0.3 percent in March despite the first decline in manufacturing activity in six months, the government reported today.

The Federal Reserve said the increase in industrial production last month followed gains of 0.2 percent in February and no change in January. It was the best overall showing since a huge 0.8 percent jump in industrial production in December.

Much of the strength came from a big 0.7 percent rise output at the nation's utilities, reflecting colder weather in March. Production at U.S. factories edged down 0.1 percent last month as auto plants reduced production. It was the first factory decline since a 0.4 percent drop last September.

The overall 0.3 percent increase in industrial production was in line with economists' expectations although they had not anticipated the decline in factory production.

Some analysts have begun to worry that the most recent spike in oil prices will result in a repeat of last year's performance when surging oil prices pushed the country into a "soft patch" when consumers cut back on spending.

Federal Reserve board member Donald Kohn said in a speech Thursday that while last year's energy price gains had a limited impact in dampening spending, the "persistence of higher prices may have a culmulating effect on spending." He said the early effects of that could be showing up in retail sales, which rose a disappointing 0.3 percent in March, less than half what analysts had been expecting.

The 0.1 percent drop in factory output in March followed two months of 0.3 percent gains. The mining sector, which includes oil production, boosted its output by 0.7 percent in March, compared to a 0.4 percent increase in February.