Utility Strength Spurs a Rise in Industrial Production
Posted on: Saturday, 18 March 2006, 12:00 CST
By Jeannine Aversa Associated Press
WASHINGTON -- Without the vagaries of changing weather patterns, the growth rate in America's industrial production sector last month likely would have been negligible.
But Mother Nature's weather flip-flop -- a return of more-normal winter cold in February after an unusually warm January -- caused this significant economic measure to increase by 0.7 percent. This is because of a big pickup in output at utility companies. As this was happening, factory production was flat.
The sharp increase reported for overall industrial activity by the Federal Reserve on Friday came after an 0.3 percent dip in January.
The January dip reflected a huge decline in production at gas and electric utilities due to unusually warm weather. And the 7.9 percent increase in utility output registered in February reflected just the opposite, the Federal Reserve said.
The report, thus, offered a mixed picture on activity in the various pieces of the economy's industrial sector.
Production at factories was flat in February, after jumping by a strong 0.8 percent in January. February's showing was the weakest since a 0.5 percent decline in factory output in September.
Weakness in the automotive sector was a key factor in February's lackluster showing for factory activity.
Economists, however, believed the flat reading in manufacturing output was just a temporary lull and not a harbinger of troubles ahead.
"If anything, this is a pause," said economist Ken Mayland, president of ClearView Economics. "My impression is that manufacturing is doing better than the flat reading suggests."
On Wall Street, the latest economic news helped stocks to extend their rally. The Dow Jones industrials closed up 26.41 points at 11,279.65 -- the index's highest close since May 21, 2001.
Broader stock indicators also gained ground. The S&P 500 index rose 1.92 to 1,307.25 -- its highest close since it reached 1,309.38 on May 22, 2001 -- and the Nasdaq composite index added 6.92 to 2,306.48.
The market also weighed a mixed assessment of consumers from the University of Michigan. Its consumer-sentiment index for March came in at 86.7, unchanged from February but below economists' prediction of 88.
Friday's advance left the major indexes with sturdy gains this week as traders showed optimism about recent economic data on inflation, housing and retail sales. For the week, the Dow rose 1.84 percent, the S&P 500 gained 2 percent and the Nasdaq ended 1.96 percent higher.
Source: Deseret News (Salt Lake City)
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