Manufacturing output, which accounts for three-fourths of total industrial production, slipped 0.1% after a stronger advance in February than initially reported.

However, the cost of processed goods for intermediate demand rose by the most in nearly four years, boosted by rising energy and food costs.

The core PCE price index, the Fed's preferred inflation gauge, rose 3% year-over-year in February.

On average, payrolls rose 68,000 in the first three months of 2026, the strongest run in almost a year.

"You're never going to completely change the narrative with one report, but I think it does call into question just how firm is that stabilization?"

The increase in factory production reflects rebounds in output of both business and construction supplies, adds to signs of a recovery in manufacturing.

The core CPI rose from a year ago by the least since 2021, and traders boosted bets that the Federal Reserve will cut interest rates three times this year.

In November, U.S. durable goods orders rose by the most in 6 months.