The Federal Reserve’s new industrial production report today showed that the strongest back to back real increases since February and March, 2014 drove domestic industry to its highest inflation-adjusted output level since June, 2008 – shortly after the official onset of the Great Recession. As a result of the broad-based improvement, manufacturing’s February constant-dollar year-on-year growth (1.39 percent) since April, 2015 (1.46 percent). Three of the last four monthly figures have now been revised positively. A new all-time high was recorded for inflation-adjusted durable goods production, leaving it 2.72 percent larger than at the last recession’s onset.
One big sign of domestic manufacturing’s continuing challenges: Real production is still 2.83 percent below the levels it hit when the Great Recession began – more than nine years ago. Moreover, the bigger manufacturing picture could be significantly altered by the Fed’s release at the end of this month of revisions going back to 2015.
Here are the manufacturing highlights of the Federal Reserve’s new release on February industrial production:
>In February, the first consecutive monthly U.S. real manufacturing output increases of 0.50 percent or better in three years helped industry reach its highest inflation-adjusted production levels since the early months of the Great Recession.
>The 0.51 percent sequential gain in February – which is still preliminary – followed an upwardly revised 0.54 percent gain in January. The result was the first such growth since February and March, 2014 (0.70 percent and 1.07 percent, respectively).
>Moreover, the new data look even better considering that these 2014 figures in part reflected a bounce-back from an unusually harsh winter.
>In addition, February’s year-on-year after inflation manufacturing output improvement of 1.39 percent was the best recorded since April, 2015’s 1.46 percent.
>The February manufacturing improvement was broad-based. Durable goods’ real output rose sequentially by 0.58 percent, and non-durables comparable production was up 0.42 percent.
>Another sign of breadth – inflation-adjusted manufacturing production increased by 0.45 percent even after stripping out the automotive sector that has led industry’s rebound for much of the current economic recovery.
>Generally positive revisions also buoyed manufacturing’s recent growth performance. November’s monthly advance was upgraded for a second time, from 0.04 percent to 0.06 percent. December’s initially upgraded sequential improvement of 0.26 percent was revised down a tick to 0.25 percent. But January’s initially reported 0.22 percent gain more than doubled – to 0.54 percent.
>Yet even after these new strides, price-adjusted U.S. manufacturing production still remains 2.83 percent below its level in December, 2007 – when the Great Recession officially began. Further, the Fed’s release on March 31 of revisions going back to 2015 could significantly change the manufacturing data.
>February’s figures put real durable goods output at a new all-time high. The sector is now 2.72 percent bigger in constant-dollar terms than at the recession’s onset.
>Further, it’s 1.86 percent year-on-year constant dollar growth was its fastest since November, 2013’s 2.67 percent.
>In February, non-durable goods’ after-inflation output hit its highest level in more than eight years. The super-sector is now 0.91 percent bigger than it was in November, 2008.
>But its 0.82 percent annual February growth was only its best since last March’s 0.77 percent.
>Moreover, non-durable goods output after inflation is still 9.40 percent below its pre-recession peak, reached in July, 2007.