Although the 0.6% m/m decline in March industrial production was mainly due to the unwinding of the weather distortion, which triggered a spike in utilities output in February, the weakness in the manufacturing sector continued.
Manufacturing output increased by 0.1% m/m in March, which was a bit better than the 0.2% m/m decline we were anticipating. Unfortunately, the contraction in January was also revised up from 0.3% m/m to 0.6% m/m. As a result, manufacturing output declined at a 1.2% annualised pace over the first quarter, the first quarterly dip since the recession ended in 2009.
The unseasonably cold weather and the West Coast port dispute undoubtedly played a role, but that quarterly decline is also a reflection of the weakness of global demand and the impact of the stronger dollar.
"Nevertheless, in a relatively closed service-based economy like the US, a muted performance from manufacturing this year shouldn't prevent a solid showing from the wider economy. Despite the slow start to the year, we still expect GDP growth to be around 3.0% for 2015 as a whole." said Capital Economics in a report on Wednesday
