US industrial output rises on jump in vehicle production

US industrial production exceeded expectations last month, according to fresh data published Tuesday, buoyed by a sharp rise in the production of vehicles and parts amid rising trade uncertainty. Industrial output increased by 0.7 percent in February, after rising by a revised 0.3 percent a month earlier, the Federal Reserve said in a statement.

This was significantly above market expectations for a 0.2 percent rise, according to Briefing.com.

President Donald Trump has embarked on a trade war since taking office, hitting top US trading partners like Canada, Mexico, and China, in a move that has unsettled the financial markets.


Trade uncertainty has lingered for months, but it seems that tariff-sensitive sectors like autos have looked to produce more goods while they still face lower trade barriers.

There was a steep rise in manufacturing output, which was "boosted by a jump of 8.5 percent in the index for motor vehicles and parts," the Fed said.

"Manufacturers raced to produce goods in February before large tariffs on imports could be imposed, as well as to meet a temporary tariff-induced spike in orders from households and businesses," Pantheon Macroeconomics chief US economist Samuel tombs wrote in a note to clients.

"The auto sector stands to be one of the biggest losers if Mr. Trump imposes tariffs of 25 percent on all imports from Canada and Mexico, given that many parts criss-cross land borders multiple times," he added.

The mining index also rose, while the index for utilities slipped 2.5 percent, according to the Fed.