Industrial Production Expands for Second Consecutive Month

By at 16 April, 2024, 5:15 pm

by Raymond J. Keating – 

Industrial production – that is, the actual physical output of the manufacturing, mining and utility sectors free from price changes – grew for the second straight month in March 2024.

Industrial production was up by 0.4 percent in March, which followed on a 0.4 percent gain in February as well. However, given a decline of 0.5 percent in January, the Federal Reserve noted that industrial production “declined at an annual rate of 1.8 percent in the first quarter,” and “in March was unchanged compared with its year-earlier level.”

As noted in the following chart, industrial production is down from its recent high in September 2022.

Source: Federal Reserve Bank of St. Louis, FRED

As for manufacturing production, which is the key subsection of industrial output, it grew by 0.5 percent in March, following on a gain of 1.2 percent in February and a decline of 1.1 percent in January. And as noted in the following chart, manufacturing also remains down from its recent high in October 2022.

Source: Federal Reserve Bank of St. Louis, FRED

The industrial sector has moved in the right direction in the last two months. Let’s hope that this is the start of a real growth trend. And this is a small business issue, as, for example, manufacturing overwhelmingly is about smaller businesses (e.g., 93.4 percent of U.S. employers in manufacturing have fewer than 100 workers).

From a policy perspective, a return to robust growth isn’t about industrial policy, whereby politicians dole out tax dollars to politically-favored businesses and for media attention. Instead, policy needs to be focused on foundational issues that will spur entrepreneurship and private investment, such as substantive and permanent tax and regulatory reform and relief, and advancing free trade.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.


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