The slowing of economic growth in the first quarter was reflected in the third straight month of lower manufacturing output and lower homebuilder sentiment.
The Federal Reserve said Monday that U.S. manufacturing output fell 0.2% in February, and that the rates of change for manufacturing in both December and January were lower than previously reported.
The production of durable goods fell 0.6%, while the production of nondurable goods rose 0.2%, the Fed said. The motor vehicles and parts industry posted a decline of 3%, the largest decrease among durable goods manufacturers; most other industries moved down more than 0.5%. Only the aerospace and miscellaneous transportation equipment industry recorded a significant increase in production, advancing 1.2%.
Among the major nondurable goods industries, gains in the indexes for textile and product mills, for petroleum and coal products, and for chemicals more than offset losses elsewhere, the Fed said. The production of other manufacturing industries such as publishing and logging moved up 0.5%.
Capacity utilization for the industrial sector decreased to 78.9% in February, said the Fed. That rate is 1.2 percentage points below the long-run (1972–2014) average.
A Reuters article Monday said the economy slowed in the winter due to harsh weather, a strong dollar, and weaker demand overseas, and the now-settled labor dispute at West Coast ports. Economists have “slashed” GDP growth estimates for the quarter to as low as a 1.2% annualized pace.
“The recovery appears to have hit a soft patch,” TD Securities in New York deputy chief economist Millan Mulraine told Reuters.
Reuters also reported that the National Association of Home Builders/Wells Fargo Housing Market index fell to 53 from 55 the month before. Economists polled by Reuters had predicted the index would rise to 56.