Best Financial Markets Analysis Article Industrial production rose 0.8% during March, following more muted gains of 0.1% in each of the prior two months. Factory production, which excludes output of the nation's utilities and mining sector, advanced 0.7% in March, following impressive gains of 0.8% and 0.6% in January and February, respectively. As a result of these strong monthly increases, factory production in the first quarter of 2011 moved up at an annual rate of 9.2%, the largest increase since 1997 (see Chart 4).

In March, auto production surged 2.9% and raised the annualized increase in auto production to nearly 30% in the first quarter of 2011. High-tech production was another component showing strong growth in March (+0.9%) and in the first quarter (+38.8%, annualized). Excluding autos and high-tech, factory production rose 0.5%, which puts the first quarter annualized gain at 5.6% (see Chart 5).

The operating rate of the nation's industries increased to 77.4% in March from 76.9% during February, while factory sector's capacity utilization rate increased to 75.3% from 74.9% in the same period. The long-term average of the operating rate for the factory sector is 80.6%. Effectively, there is still sufficient excess capacity in the factory sector if demand gathers steam.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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