Macro Flash Report

Takeaway:

Industrial production increased in line with expectations while the manufacturing subindex beat them. The trend is encouraging, especially given the ISM Manufacturing PMI finally pushing into expansion territory, joining the S&P Global Manufacturing PMI with its 3-month expansionary trend. However, the important question from here is how much of the increased activity was based on last years expectations for rate cuts as early as March.

Industrial & Manufacturing Production

March’s Industrial Production increased by 0.4%, matching market expectations and sustaining the growth rate from an upwardly revised 0.4% in February from 0.1%. For the first quarter of the year, industrial production decline by 1.8% year-over-year. Specifically, outputs in the manufacturing and mining sectors decreased by -0.1% and -1.4%, respectively. This quarterly downturn highlights the challenges facing the industrial sector, despite some positive monthly performance metrics.

Manufacturing (SIC) Production, which constitutes 78% of total industrial output, rose by 0.5%, following a notable 1.2% increase in February after upward revisions from 0.8% growth and beat the forecasted 0.2%. The sector saw mixed results across its divisions, but this increase was mainly propelled by a 3.1% surge in the production of motor vehicles and parts, which drove durable goods manufacturing up by 0.3%. For the first quarter of the year, factory output dipped slightly, showing a 0.1% annual decrease. This reflects underlying challenges in the manufacturing sector, which is experiencing uneven growth across its various segments.