Implications:  Industrial production rebounded in February, with the underlying details coming in stronger than the headline gain of 0.1%.  The Federal Reserve highlighted that February’s winter weather was milder than January’s, boosting production.  The manufacturing sector was the biggest source of strength in today’s report, with activity rising 0.8%.  Non-auto manufacturing (which we think of as a “core” version of industrial production) posted a gain of 0.8% in February, the largest in more than a year. Meanwhile, auto production jumped 1.9%, as well.  Notably, the production of high-tech equipment also rose for the thirteenth month in a row and is up 18.6% in the past year, by far the strongest growth of any major category.  This likely reflects investment in AI as well as the reshoring of semiconductor production, which remains temporarily strong due to the CHIPS Act, despite broader weakness in the industrial sector.  The mining sector rebounded in February, too, increasing 2.2%, also the largest monthly gain in over a year.  Broad-based strength in oil and gas extraction as well as mineral extraction contributed.  Finally, the utilities sector (which is volatile and largely dependent on weather) was the big source of weakness in today’s report.  Activity plummeted 7.5% in February, the largest monthly decline since 2006, as the end of unusually cold weather in January rapidly reduced demand for home heating.  In other news this morning, the Empire State Index, a measure of manufacturing sentiment in the Northeast, dropped unexpectedly to -20.9 in March from -2.4 in February, while import prices increased 0.3% in February and export prices jumped by 0.8%.  In the past year, import prices are down 0.8% while export prices are down 1.8%.

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