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At 101.6% of its 2002 average, industrial output in March was 4%above its year-earlier level. Capacity utilization--a gauge ofslack in the economy--advanced 0.2 percentage point to 73.2%, arate 7.4 percentage points below its average from 1972 to 2009, but3.7 percentage points above the rate from a year earlier.

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Meanwhile, consumer goods declined 0.2% in March. However,output in the first quarter rose at an annual rate of 4.9%, and theindex in March was 3.3% above its year-earlier level. Also inMarch, the production of consumer durables strengthened by 2%,supported by a jump in automotive products. Posting less of a jump,the output of non-energy non-durables moved up 0.2%, while theproduction of consumer energy products actually contracted 3.7%.According to the Federal Reserve, the gain in non-energynon-durables reflected increases in food, tobacco and clothing,which more than offset decreases in both chemical and paperproducts. Meanwhile, the index for consumer nondurable energyproducts was weighed down in March by the weakness in residentialsales by utilities.

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The index for business equipment expanded 1.4% in March, risingat an annual rate of 13.2% for the first quarter. The quarterlygain was boosted by strength in the production of industrial andinformation processing equipment, the latter of which posted anincrease of 1.9%, led largely by gains in search and detectionequipment as well as measuring and controlling instruments.

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For its part, industrial equipment inched up 0.8% and gained16.1% at an annual rate in the first quarter--the category'slargest gain since the fourth quarter of 1987. Transit equipmentadvanced 2.2%, but this rise followed five months of declines. Butwith non-industrial supplies, the output of construction suppliesadvanced 2.3% and increased 4.9% at an annual rate in the firstquarter; nevertheless, the index in March was little changed fromits year-earlier level. The production of business supplies fell1.4%, but edged up by 3.8% in the first quarter.

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Durable goods advanced 1.4% and rose 10.5% in the first quarter,the third consecutive quarterly increase. In March, all majorcategories of durables strengthened, and most categories postedgains of more than 1%. Expansions of 2% or more were recorded forcomputer and electronic products, motor vehicles and parts andfurniture and related products. On the nondurable front, the outputof petroleum and coal products jumped 3% in March, while plasticsand rubber products posted an increase of 1.7%. The indexes forfood, beverage, tobacco products, apparel and leather recorded moremoderate gains.

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