03:49 PM EDT, 04/16/2024 (MT Newswires) -- US industrial production increased in line with market projections last month as manufacturing output outpaced expectations while mining activity fell, according to Federal Reserve data published Tuesday.

Industrial output gained 0.4% in March after rising by an upwardly revised 0.4% in February, the Fed said. The results matched the consensus, according to a survey compiled by Bloomberg. Annually, industrial production was flat.

"The solid monthly gain boosted the year-on-year growth rate of total production to flat after two consecutive declines," BMO Senior Economist Jay Hawkins said in a note. In the first quarter, production was down 1.8% at an annual rate.

Among major industry groups, manufacturing output grew by 0.5% last month after climbing by an upwardly revised 1.2% in February, outperforming the consensus's 0.2% view. Durable manufacturing gained 0.3% while the index for nondurables rose 0.7%, according to the Fed report.

Recovery of the manufacturing sector, which Hawkins called "interest-rate sensitive," is expected to remain weak and uneven until the Federal Reserve begins cutting interest rates, he said. Hawkins forecasts that to happen in July. Projections for a cut at the central bank's July 30-31 meeting were at 38.4% on Tuesday, compared with nearly 56% betting rates would remain unchanged, according to the CME FedWatch tool.

Within durables, motor vehicles and parts jumped 3.1%, while aerospace and miscellaneous transportation equipment climbed 1.2%. Those gains were partially offset by declines for nonmetallic mineral products, furniture and primary metals. Among nondurables, petroleum and coat products increased 4.8% while apparel and leather reported a 1.7% drop.

Mining output decreased 1.4% last month after jumping 3% in February. Utilities production increased 2% after dropping 7.6% the month prior, with electric and natural gas growing by 2% and 2.3%, respectively, Fed data showed.

Capacity utilization moved up to 78.4% from 78.2% month-to-month in March, which the Fed said is 1.2 percentage points below its long-run average.