February Industrial Production Rises More Than Forecast; Oxford Economics Warns of Risks From Iran War

03:28 PM EDT, 03/16/2026 (MT Newswires) -- US industrial production increased more than expected in February, data from the Federal Reserve showed Monday, while Oxford Economics warned that the ongoing US-Israel war with Iran poses risks ahead.

Industrial output rose 0.2% last month, marking its fourth consecutive month of growth, but slowing from a 0.7% gain in January. The consensus was for an increase of 0.1% in February in a survey compiled by Bloomberg.

Manufacturing output grew 0.2% in February following a 0.8% advance the month prior. The durable manufacturing index ticked up 0.1%, led by the motor vehicles and parts component. Nondurable manufacturing output rose 0.2%, buoyed by gains in chemicals, plastic, and rubber and paper products.

"Although manufacturing continues to contend with cost pressures and tariff headwinds, recent gains suggest underlying support from still-healthy demand, particularly for business equipment," Priscilla Thiagamoorthy, senior economist at BMO Capital Markets, said in a note.

A surge in energy prices in the wake of supply disruptions to the crucial Strait of Hormuz amid the Iran war poses risk to industrial production ahead, Oxford Economics said in remarks e-mailed to MT Newswires. The strait is a critical shipping route that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.

"Manufacturing is at risk from higher energy prices, which will crimp aggregate demand via a real income shock and uncertainty," Oxford Lead US Economist Bernard Yaros said. "Output of paper, primary metals, and plastics will come under more pressure, as energy is a larger than average share of their cost structure."

However, Oxford said it expects a couple of factors to "cushion the blow" to industrial production from the fallout of the Iran war. "Incoming source data for (the first quarter) suggest no sudden stop in the (artificial intelligence) investment cycle, while the One Big Beautiful Bill Act has increased the after-tax return on capital investments," Yaros wrote.

Mining output increased 0.8% last month following a 0.9% rise in January, while utilities output fell 0.6% after 0.1% growth, Fed data showed Monday.

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