Industrial production fell back -0.1% in March with a -0.8% drop in mining being offset by a +0.2% gain for utilities while manufacturing output was flat after dropping for the first two months of 2019. The largest monthly drops in manufacturing were for motor vehicles (-2.5%) and wood products (-2.2%), with yearly drops for apparel and leather (-14.5%), wood products (-4.7%), and motor vehicles (-4.5%), and yearly gains for transportation equipment (+7.9%), computers and electronics (+5.9%), and machinery (+4.4%). On a yearly basis mining was up +10.5% and utilities were up +3.8%, but a +1.0% gain in manufacturing limited overall yearly production to a +2.8% gain. Capacity use fell for the month from 79.0% to 78.8% primarily due to a drop in mining capacity use from 92.1% to 90.9%, although mining capacity grew by 7.7% over the year and continues to remain well above its long run average of 85.4%.

March’s retail sales were up +1.6%, recovering from the previous month’s -0.2% slump, and the gain helped to raise sales for the first quarter of 2019 by +2.9% versus +0.1% for the last quarter of 2018. A +3.1% gain in motor vehicle sales was a significant component of the overall increase, along with a +3.5% rise in gas sales that was largely the result of a 9% hike in gas prices. Sporting goods/hobby stores were the only sector to register a monthly drop (‑0.3% monthly, -9.7% Y/Y), although miscellaneous stores and electronics/appliance stores also registered yearly sales drops of -1.2% and -2.7%, respectively. On a yearly basis, online stores grew +11.6%, health/personal care stores grew +4.4%, and restaurants grew +4.3%.

Housing starts in March were at the weakest rate since May 2017, dropping -0.3% to a seasonally adjusted annual rate of 1.139 million, which is -14.2% lower than the previous year. Inclement weather in the Midwest slowed new home construction by -17.6% (-28,000 units) for the month, with the bulk of the slowdown in single family homes (-22,000), and helping drive the drop of yearly Midwest starts by -51,000 to 131,000. The South dropped ‑7.2% for the month to a 604,000 annual rate, down -4.1% for the year overall, although single family construction increased over the year by +3.9% to 457,000 units. Construction ramped up in the West in March, with a +76,000 gain to 318,000 units, but an overall yearly loss of ‑19.5% from 395,000 a year previously. Starts were mixed in the Northeast with single family construction up +18.8% for the month (+9,000), but down -4.4% (-4,000) overall, and down ‑28.3% (-34,000) for the year.