Industrial Output Edged Up In February

A big surge by utilities due to a cold winter offset a third straight decline in factory output.

WASHINGTON (AP) — U.S. industrial production edged up in February, as a big surge by utilities due to a cold winter offset a third straight decline in factory output.

Overall industrial production rose 0.1 percent in February following a revised 0.3 percent fall in January, the Federal Reserve reported Monday. The January retreat had initially been reported as a small 0.2 percent gain.

The key category of manufacturing fell 0.2 percent following declines of 0.3 percent in January and 0.1 percent in December. The weakness stemmed from a 3 percent drop in output of motor vehicles and parts, the third straight decline in this category. Production of machinery and primary metals such as steel and appliances fell as well.

Manufacturing growth has slowed over the past six months. U.S. producers have had to contend with a rising dollar, which makes their goods more expensive in foreign markets.

Analysts also blamed some of February's weakness to supply disruptions from the labor dispute at West Coast ports. The dispute was settled in the third week of February, but analysts said it could take months to work through a massive backlog of containers at the port.

The 7.3 percent surge in utility output reflected unusually cold weather in many parts of the country.

Output in mining fell 2.5 percent in February after a 1.3 percent drop in January, in part reflecting a cutback in drilling operations because of the big fall in energy prices. Oil prices have tumbled by about half since last summer. That has led drilling companies to hold off on digging new wells and has limited oil and gas extraction.

The Institute for Supply Management, a trade group for purchasing managers, reported that its index of manufacturing activity slipped to a reading of 52.9 in February, marking the fourth straight drop and the lowest reading since January 2014. The ISM index showed that orders, hiring and production all slowed last month.

While factory growth is still boosting the U.S. economy, manufacturing growth has been more sluggish in recent months. The ISM manufacturing index hit a three-year high in August.

The rising dollar is expected to contribute to bigger trade deficits this year. The trade deficit widened in the October-December quarter, subtracting 1.1 percentage points from the economy's growth rate during the period.

Growth slowed to a rate of 2.2 percent in the fourth quarter, and many analysts believe the pace will be similar in the January-March quarter.

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