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Economy in Brief

U.S. Factory Output Declines Sharply
by Tom Moeller  February 14, 2014

The output of U.S. factories fell 0.8% (+1.3% y/y) during January following 0.3% gains during the prior two months, both revised down from 0.5%. The latest decline was the largest since May 2009. Overall industrial production fell a lesser 0.3% (+2.9%y/y) as utility output ramped up 4.1% (9.4% y/y) with colder temperatures. A 0.3% increase in total production was expected in the Action Economics forecast survey.

The largest sector shortfall in January was in construction supplies where production declined 1.0% (+1.7% y/y). In addition, a 0.5% drop (+2.7% y/y) in consumer goods output was led by a 5.0% drop (+2.8% y/y) in motor vehicle & parts output. Electrical equipment production fell 1.9% (+1.2% y/y) while furniture output was off 1.2% (+5.0% y/y). Working the other way, computer & electronic components production improved 0.9% (4.2% y/y) and machinery output gained 0.6% (3.3% y/y). Amongst nondurable goods industries, textile production fell 1.7% (-3.2% y/y) and chemical production was off 0.7% (+0.3% y/y).

In the capital goods sector, output slipped 0.1% (+2.4% y/y). Output of transit equipment fell 1.3% (+2.8% y/y) but production of information & processing equipment gained 1.3% (1.9% y/y). Factory sector activity excluding the high tech & auto industries declined 0.5% (+1.0% y/y) last month. The y/y gain slowed, however, from its October peak of 3.2%.

The capacity utilization rate edged down to 78.5% last month from a downwardly revised 78.9%. That remained below the 80.5% high averaged in 2007. In the factory sector, the capacity utilization rate fell to 76.0% and remained below 78.6% before the recession. Growth in total industry capacity was 1.8% y/y versus a 2.2% rise in 2012.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) Jan Dec Nov Jan Y/Y 2013 2012 2011
Total Output -0.3 0.3 0.7 2.9 2.6 3.6 3.3
Manufacturing -0.8 0.3 0.3 1.3 2.2 3.9 3.4
  Consumer Goods -0.5 0.6 0.7 2.7 2.2 1.6 1.5
  Business Equipment -0.1 -0.7 -0.4 2.4 3.5 8.3 5.6
  Construction Supplies -1.0 -0.6 0.4 1.7 4.4 5.2 3.0
Materials -0.3 0.5 1.0 3.4 2.8 4.1 4.7
Utilities 4.1 -1.4 2.9 9.4 1.8 -2.1 -0.2
Capacity Utilization (%) 78.5 78.9 78.8 77.7 78.2 77.6 76.5
 Manufacturing 76.0 76.7 76.6 76.2 76.3 75.8 74.0
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