U.S. industrial production increased 0.3% in March 2008 the U.S. Federal Reserve announced Wednesday, as business equipment and utilities services demand increased. Economists surveyed by Bloomberg News had expected industrial production to decline 0.2% in March 2008.

Meanwhile, production for February 2008 was revised lower to a decline of 0.7%, compared with the previous estimate of a 0.5% decline. Also, capacity utilization increase 0.2% to 80.5% in March 2008 up from 80.3% in February 2008. Economists surveyed by Bloomberg News had expected capacity utilization to total 80.3% in March 2008.

For Q1 2008, industrial production declined 0.1%, after rising 0.4% in Q4 2007. Industrial production is up 1.6% in the last 12 months.

Industrial output evaluation

Economist David Wang said investors should not get too giddy about the positive surprise concerning the March 2008 industrial production data. "It was a pleasant surprise, but keep in mind it is just one month. The economy remains near or in a recession and consumer demand is low," Wang said. "That means we're likely to see slack demand for industrial output this summer, and I expect the industrial sector to curtail some operations, so I expect the summer industrial production data to reflect that."

In March 2008, utility output surged 1.9%, semiconductor production increased 3.9%, mining increased 0.9%, manufacturing output rose 0.1%, non-industrial production supplies increased 0.6%, while consumer goods output was flat. Construction materials production fell 0.2%.

The Fed's monthly industrial production statistic indicates how much U.S. factories, mines, utilities and related plants are producing. Further, although the manufacturing sector accounts for less than 20% of the U.S. economy, because a considerable portion of it is cyclical activity, the report has a major impact on the stock market.