Industrial Production Gains Steam in March

The nation’s industrial sector was humming in March, with production at factories, mines and utilities rising 0.6%, the Federal Reserve reported Friday.

The solid performance in overall industrial production suggests that the economy was heading into the spring with decent momentum.

The increase came after a 0.5% rise in February and was the largest since December. The showing was better than economists had expected.

The report also showed that the proportion of overall industrial capacity in use rose in March to 81.3%, the highest since September 2000.

Economists look at the capacity utilization figure for clues about the future inflation climate. For instance, if plants were running at full tilt and couldn’t produce enough goods to satisfy customers’ demand, there could be a run-up in prices.

Economists believe that the economy grew at a brisk pace of 4.5% or higher in the January-March quarter.

The government will release first-quarter figures at the end of the month.

In the current quarter, growth is expected to ease to a pace of about 3%, which would still be considered healthy, analysts said.

With the economy chugging ahead at a solid clip, the Federal Reserve and other economists are being especially watchful for any signs that inflation may flare up.

The Federal Reserve boosted a key interest rate to a five-year high March 28, the latest in a series of rate-raising moves since June 2004 to keep inflation in check. Analysts expect another rate increase May 10, the Fed’s next meeting.

Friday’s report showed that manufacturing production rebounded in March, rising 0.5%. That marked an improvement from the 0.1% dip registered in February, a weak performance that analysts believed at that time was a temporary soft spot.

Output at mines rose 0.9% in March after dropping 0.7% in February.

Production at gas and electric utilities -- which had gyrated wildly during January and February because of unusual weather -- posted a 0.5% increase in March.