US industrial output flat in March as manufacturing fails

U.S. industrial output was flat for a second straight month in March, held back by a drop in manufacturing, according to a Federal Reserve report on Tuesday that suggested a cooling in factory activity.

Economists polled by Reuters had expected industrial production to increase 0.3 per cent last month.

For the first quarter as a whole, industrial production rose at an annual rate of 5.4 per cent, with manufacturing advancing at a 10.4 per cent pace - the largest gain since the second quarter of 2010.

Last month, manufacturing activity was dragged down by a sharp decline in the production of nonmetallic mineral products. Auto production increased 0.6 per cent after rising 0.8 per cent in February.

Utilities output increased 1.5 per cent after edging up 0.1 per cent in February. Production at mines rose 0.2 per cent after falling 4.0 percent the prior month.

Capacity utilization, a measure of how fully firms are using their resources, fell to 78.6 per cent from 78.7 per cent in February. That was 1.7 percentage points below its long run average.

Officials at the Fed tend to look at utilization measures as a signal of how much "slack" remains in the economy -- how far growth has room to run before it becomes inflationary.

Copyright @Thomson Reuters 2012