Industrial production is still strong

March industrial production and manufacturing production came in weaker than expected (production was flat and manufacturing declined by 0.2%). But as with the case of housing starts (see previous post), this is not a reason to think that the U.S. economy has taken a turn for the worse. No series ever moves in a straight line, and although first quarter industrial production was weakened by unseasonably warm weather which sharply reduced utility output, industrial production still rose at a 2.8% annualized pace in the first quarter. Abstracting from utility output, manufacturing production rose at a 7.1% annualized pace in the first quarter. This is robust growth.

The charts above should make it clear that the trend in both is clearly upwards, and it's impressive at that. Industrial production is up at a 4.7% annualized pace over the past six months, and manufacturing production is up at a 7.4% annualized pace. Moreover, U.S. output has far outpaced European output over the past seven months, which has suffered from the fallout from the Eurozone sovereign debt crisis.