US industrial production edges past forecasts in March

Higher demand for heating buoyed industrial production in the States during March, boosting utilities output as temperatures slipped from the record highs experienced during the month before.

Total production grew by 0.5% month-on-month, according to the Federal Reserve, easily outstripping economists' forecasts for a gain of 0.1%.

That followed a slightly upwardly-revised increase of 1.0% in the month before.

However, the details of the report were fairly solid, with output of business equipment growing by 0.5% on the month, following a rise of 0.6% in February.

Output of consumer goods meanwhile also grew strongly, expanding by 0.6% after a jump of four tenths of a percentage point in the month before.

Nevertheless, manufacturing production only eked out a gain of 0.1% on the month, as increases of 0.4% for durable goods and of 0.2% for 'other manufacturing' were offset by a 0.3% drop in the output of non-durables.

Motor vehicles and parts production experienced the largest increase among the former, rising by 2.7% month-on-month, as vehicle assemblies rose to an annualised pace of 12.0m units - hitting their highest mark since December 2016.

Mining output was also strong, growing by 1.0% on the month and taking the year-on-year gain to 10.8%, according to the central bank.

Yet despite having increased for six consecutive quarters, that remained four percentage points below the peack reached in 2015.

Versus a year-ago, total production increased by 4.3%.

US industry operated at 78.0% of capacity last month (consensus: 77.9%), up from 77.7% in the month before.

Following Tuesday's data, Barclays Research bumped-up its tracking estimate for US GDP growth in the first quarter from an annualised pace of 1.6% to 1.7%.

"The survey evidence suggests that growth should remain solid over the next few months, although one or two of the manufacturing surveys in advanced economies, including the US, are warning that the global economic upswing may have peaked," said Michael Pearce at Capital Economics.

"Nevertheless, with the dollar down by around 10% since the beginning of 2017, the outlook for the manufacturing sector is still bright."