Activity in the factory sector weakened significantly last month. Industrial production declined 0.6% (+3.8 y/y) during January following a 0.1% December uptick, revised from +0.3%. A 0.2% rise had been expected in the Action Economics Forecast Survey.

Manufacturing production declined 0.8% (+2.8% y/y) and reversed the December increase. Consumer goods output fell 0.7% (+0.1% y/y), extending the prior month's 0.9% decline. Auto production cratered 8.0% (-0.5% y/y) and reversed two months of strong increase. Appliance & furniture output fell 0.9% (-0.1% y/y) after a 0.6% decline. Working higher, output of computers, video & audio equipment jumped 1.6% (15.8% y/y) following three straight months of strong gain. In the nondurable goods sector, apparel production fell 1.0% (-7.8% y/y), extending a series of large monthly declines. Chemical product production eased 0.1% (+1.2% y/y) but output of paper products rose 0.9% (-4.1% y/y). Production of business equipment fell 1.5% (+3.8% y/y), reversing three straight months of increase. The decline was led by a 5.3% drop (+3.2% y/y) in transit equipment production. Information processing equipment fell 1.8% (+3.0% y/y), reversing the December rise.

Production of construction supplies fell 0.4% (+5.3% y/y) after a 2.0% rise. Materials production declined 0.4% (+6.2 y/y) and reversed the December increase.

Output of selected high-technology products nudged 0.1% higher (6.5% y/y) following three consecutive months of increase. Computer & office equipment production strengthened 1.2% (-3.9 y/y), but communications equipment production held steady (+17.4% y/y). Semiconductor & related product production eased 0.1% (+7.4% y/y).

Excluding the motor vehicle sector, factory output eased 0.2% last month (+3.1% y/y) following a 0.5% rise.

Capacity utilization fell to 78.2% with the lower level of output. It was the weakest utilization rate in six months. Factory sector utilization declined to a three-month low of 75.8%. Factory sector capacity increased 1.4% y/y and sustained the recent increased rate of gain versus its decline in 2015.

Industrial production and capacity data and US Population-Weighted Heating and Cooling Days are included in Haver's USECON database. Additional detail on production and capacity can be found in the IP database. The expectations figures come from the AS1REPNA database.