Implications: Ignore the headline 0.1% dip in industrial production in February, which was all due to the hyper-volatile utility sector. Manufacturing production was up 0.4% and gained 1% including upward revisions for prior months. Much of the manufacturing gain was due to autos, which surged 4.2% in February after a 4.5% spike in January. After excluding strong auto production, manufacturing still increased 0.2% in February and was upwardly revised for prior months. We believe industrial production is going to continue to move higher and will likely keep being led by business equipment. Inventories are low, corporate profits are approaching an all-time high and cash on the balance sheets of non-financial companies is already at a record high. This is a recipe for higher production and stronger growth ahead. Confirming this outlook, in other news this morning the Philadelphia Fed index, a measure of manufacturing activity in that region, soared to +43.4 in March from +35.9 in February. The consensus had expected a decline. The Philly Fed Index is now the highest since the early 1980's economic boom.
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