U.S. industrial production braked sharply in February, held back by severe winter storms that slammed parts of the country, while manufacturing activity in New York state stalled this month.
The reports on Monday, however, were unlikely to raise concerns about the economic recovery given the impact of the weather and the fact that their details showed signs of underlying strength.
The Federal Reserve said industrial output edged up 0.1 percent after increasing 0.9 percent in January and attributed the slowdown to bad weather. The small gain was in line with market expectations. However, capacity utilization was the highest in more than a year.
A separate report from the New York Fed showed its gauge of manufacturing slipped to 22.86 this month from 24.91 in February. Markets had expected the measure to slip to 22.00.
I don't think there is anything to be very excited about in the numbers. I think the underlying trend is still positive, said David Sloan, an economist at 4Cast Ltd in New York.
U.S. stocks fell, weighed by persistent concerns over a possible monetary tightening in China that could slow the global recovery from recession. U.S. government bond prices were little changed, while the dollar edged higher against the euro and the yen.
The reports came ahead of Tuesday's Federal Reserve meeting on interest rates. The U.S. central bank is expected to hold overnight interest rates in a range of zero to 0.25 percent and maintain a pledge to keep them ultra-low for an extended period to foster a more robust recovery.
While manufacturing activity in New York state slowed this month, the employment index rose to its highest level since October 2007 and the inventories index rose above zero for the first time in more than a year.
You're seeing a clear evidence of a V-shaped recovery in the manufacturing sector, partly because it shrank so rapidly during the recession but also there's a lot of positive fundamentals, said Zach Pandl, an economist at Nomura Securities International in New York.
The industrial production report showed manufacturing dipped 0.2 percent last month after growing 0.9 percent in January. Mining increased 2.0 percent, adding to the 1.1 percent rise in January.
Utilities gained 0.5 percent in February after a 0.6 percent rise the prior month.
Capacity utilization, a measure of slack in the economy, inched up to 72.7 percent, the highest since December 2008, from 72.5 percent in January. That was still 7.9 percentage points below the average from 1972 to 2009, the Fed said.
A third report from the Treasury Department showed foreign investors sold a net $33.4 billion of all U.S. securities in January but remained net buyers of U.S. Treasury debt.
(Reporting by Lucia Mutikani in Washington and Wanfeng Zhou in New York; Additional reporting by Chris Reese in New York; Editing by Andrea Ricci)