Production at American factories accelerated in February 2022, indicating strength in the domestic manufacturing sector that has been rattled with high costs and persistent supply chain issues.

Manufacturing output rose by 1.2 percent after remaining almost flat for the previous two months. This is the highest monthly gain in four months. In October, the index had risen by 1.7 percent, the Federal Reserve said in a March 17 news release.

On a year-over-year basis, manufacturing activity in February 2022 increased by 7.4 percent when compared to the same month in 2021.

The total industrial production index increased by 0.5 percent in February 2022 and 7.5 percent in a year-over-year comparison to February 2021. But the Fed said that that number could be misleading, due to other factors in 2021.

“Severe winter weather in February 2021 significantly suppressed industrial activity that month. A more useful comparison shows that the [total industrial production] index has advanced a still-strong 4.2 percent since January 2021,” the Fed stated.

Capacity utilization, which measures how fully businesses are utilizing their resources, rose 0.3 percentage points to 77.6 percent in February 2022, which is 1.9 percentage points below the long-run average for 1972–2021, the Fed reported.

During the pandemic, the manufacturing sector benefited from consumer spending habits moving to goods rather than services. But manufacturers have had to struggle against worker shortages triggered by the pandemic as well as supply chain disruptions, according to a Reuters report.

Though the bottlenecks in the supply chain were showing signs of easing during recent months, Russia’s war against Ukraine is once again straining global supply logistics, Reuters reported. Together with new COVID-19 lockdowns in China, manufacturers might have to continue dealing with supply snarls.

Among industry groups, the output of motor vehicles and related parts fell by 3.5 percent as the sector continued to be weighed down by the shortage of electronic components. Utilities’ output also declined 2.7 percent, but this was the result of the United States returning to “more seasonable weather,” the news release stated.

The data on factory output comes just days after the U.S. Department of Labor released the producer price index (PPI) data, which is a measure of inflation based on changes in the costs of production. Production costs for finished goods rose by 0.8 percent in February 2022, the department stated.

PPI had risen by 1.2 percent in January 2022 and 0.4 percent in December 2021.

In New York state, the general business conditions index fell 14.9 points, landing in the negative at minus 11.8 percent in March 2022, according to a report by the New York Fed (pdf). A negative reading indicates the contraction of factory activity in the state. This is the lowest reading for the index since May 2020. Manufacturers were reporting a decline in new orders and shipments but were paying higher input prices.

“Geopolitical uncertainty likely bears much of the blame,” said Adam Kamins, an economist at Moody’s Analytics in West Chester, Pennsylvania, in a Reuters report, referring to the Russian invasion of Ukraine. “Many firms are sitting tight, either because their customers are doing so or in order to gauge the economic ramifications of the invasion.”


Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.

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