US industrial production falls on lower energy demand

FILE PHOTO: An employee works on an assembly line at startup Rivian Automotive’s electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. REUTERS/Kamil Krzaczynski/File Photo

WASHINGTON, United States — US industrial production contracted in March as warmer weather reduced the demand for energy, according to fresh data published Wednesday.

Industrial output fell 0.3 percent from a month earlier, after rising by a revised 0.8 percent a month earlier, the Federal Reserve said in a statement.

This was in line with market expectations, according to Briefing.com.

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“The March decline was led by a 5.8 percent drop in the index for utilities, as temperatures were warmer than is typical for the month,” the Fed said.

“In contrast, the indexes for manufacturing and mining grew 0.3 percent and 0.6 percent, respectively,” it added.

Tariff anticipation

The consequences of US President Donald Trump’s tariff policies could also be seen in the data, with the production of durable goods rising 0.6 percent on the back of an increase in the indexes for motor vehicles and parts and for aerospace and miscellaneous transportation equipment.

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That could be down to businesses producing more goods ahead of the April introduction of the tariffs, which pushed up the cost of many intermediate goods used in the production process.

“Last month’s gain in manufacturing output is old news, given the disruption the sector faces due to the new tariffs,” Pantheon Macroeconomics senior economist Oliver Allen said in a statement.

“Most of this recent strength has reflected consumers pulling forward demand for durable goods before tariffs lift prices, and a rush to fill orders from businesses before higher prices and supply chain disruptions make this more difficult and expensive, too,” he added.