Highlights
Industrial production rose a very solid 0.5 percent in March for a 4.3 percent year-on-year rate with mining once again leading the report, jumping 1.0 percent on top of February’s 2.9 percent surge to lift year-on-year volumes to a 10.8 percent gain. Utilities also had a good March, with output up 3.0 percent in the month following a 5.0 percent weather-related decline in February. Year-on-year, utility output is up 5.3 percent.

Now the not-so-impressive news. Manufacturing production managed only a 0.1 percent gain which is just short of Econoday’s already modest consensus. Year-on-year, production volumes are up only 3.0 percent though there are positive details in the March report. Business equipment output is solid and up 4.4 percent on the year with the selected hi-tech component showing plenty of strength, up 1.2 percent on the month and 8.9 percent on the year. Vehicle production is another positive, up 2.7 in March for an 8.2 percent year-on-year rate that, however, looks aggressive given what have been mostly moderate results for vehicle sales.

Tariffs imposed on steel and aluminum during the month don’t appear to have had any measurable effect in this report though they probably didn’t help construction supplies where output fell a monthly 0.3 percent. Turning to capacity rates, overall utilization climbed 3 tenths to 78.0 percent but is still short of the nearly 80 percent trend several years ago. But clear stress is evident in mining where capacity is at 90.1 percent. In sum, there are plenty of positives with details helping to offset the headline disappointment for manufacturing production while mining remains one of the economy’s top drivers.

Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.

Highlights
A drop in gas prices pulled down consumer prices in March which came in at Econoday’s low estimate for a 0.1 percent decline. But the core rate, which excludes energy, did hit expectations at a modest 0.2 percent monthly gain with the year-on-year rate rising 3 tenths to 2.1 percent which also hits expectations.

But the gain in the yearly rate shouldn’t raise any eyebrows since it reflects an easy comparison with March last year when wireless service prices started to plunge. The balance of core items in today’s report is showing only limited pressure with downward pull coming from apparel, at minus 0.6 percent, and education & communications, at minus 0.2 percent.

Energy was the weakest factor in the month, down 2.8 percent with gasoline down 4.9 percent. Food is not a factor in the month, rising only 0.1 percent.

But there are some items that are showing a little pressure, at least in March. Medical care rose 0.4 percent following February’s 0.1 percent decline with dental services jumping 1.2 percent. Housing is also showing pressure, though moderate, at a second straight 0.3 percent monthly gain with the closely watched owners’ equivalent rent also up 0.3 percent.

This report is roughly in line with the Federal Reserve’s expectations: modest pressure that is slowly building. Note that the Fed’s 2 percent inflation goal is tied to its PCE index not the CPI which runs a bit hotter. But both move in the same direction which on trend continues to be very slightly higher.