Industrial output outpaced expectations for February

March 16, 2026

February industrial production (IP) rose 0.2%, just above market expectations for a 0.1% gain. Manufacturing output rose 0.2%; it accounts for three-quarters of the contribution to headline IP. Mining output rose 0.8% while utility output declined 0.6%, pulled lower by a 4.7% drop in natural gas output. The fourth warmest February on record resulted in reduced heating demand throughout the country. 

The increase in manufacturing output was supported by a 1.7% rise in motor vehicle and parts production, electrical equipment up 1.1% and wood products advancing 1%. The increase in wood products is likely not sustainable. Housing construction continues to struggle under elevated mortgage rates, affordability pressures and margin constraints.

Computers and electronics output advanced 0.4%, lifted by ongoing AI demand for processing and memory chips. This category grew 6.3%, among the fastest growing over the past 12 months. Aerospace output increased 7.1% annually, up 0.3% on the month, as a major commercial aircraft builder returned to capacity. 

February’s 0.8% rise in mining output followed a near 1% increase in January. Escalating tensions in the Middle East have pushed oil prices rapidly higher. That run-up in energy prices is likely to provide an incentive for oil producers to increase their extraction activity. 

The increase in energy input costs will have dampening effects on a wide swath of industrial sectors which now have to contend with higher operating costs. On the demand side, consumers may delay their purchases of big-ticket items such as motor vehicles due to the uncertainty of how much higher gasoline prices may rise. That would result in a chain reaction as automotive manufacturers would reduce their vehicle assembly rates in response to weakened demand. Industries that did not fare as well in February included machinery output declining 1.2%, fabricated metal output falling 0.3% and primary metal output unchanged.