-John Ryding, RDQ Economics
US industrial production rose less than expected in February, clouding optimism over the economic outlook. Output of manufacturers, mines and utility producers climbed 0.1% last month, missing the predicted 0.2% gain and following a downwardly revised 0.3% decline in January. Meanwhile, manufacturing output dropped by a seasonally adjusted 0.2% in February, disappointing forecasts for a 0.1% rise and following the 0.3% decline in January. The report also showed that the capacity utilization rate, a measure of slack in the industrial sector, fell to 78.9% in February, down from 79.1% in January, compared with expectations for a reading of 79.5%. It is unclear whether the fall in manufacturing is temporary, caused by harsh weather, or if it is a sign of underlying weakness in the world's number one economy that could persist.
Meanwhile, a separate report showed optimism among US home builders continued to decline, with March marking the worst month since last summer. The housing market index dropped to 53 points this month, missing expectations for a rise to 57 points and following 55 points last month, the National Association of Home Builders reported. Yet, the gauge is still well above the crucial 50-point threshold, suggesting vast majority of builders view conditions as good.
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