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Economy in Brief

U.S. Industrial Production Slips in January on Warmer Weather and Weaker Autos
by Sandy Batten  February 15, 2017

Industrial production decreased 0.3% m/m (+0.1% y/y) in January following a downwardly revised 0.6% m/m increase in December. The consensus from the Action Economics Survey had looked for an unchanged reading for total production. In January, manufacturing output rose 0.2% m/m (+0.4% y/y), and mining output jumped an outsized 2.8% m/m (+0.4% y/y, its first y/y rise since April 2015) with most mining industries reporting increases. The index for utilities fell 5.7% m/m (-2.7% y/y), due mostly to unseasonably warm weather that reduced the demand for heating, and more than reversed the 5.1% m/m jump in December. Note that monthly data throughout 2016 have been revised to reflect updated seasonal adjustment factors.

The rate of capacity utilization for total industry fell 0.3%-pt to 75.3% in January against a consensus expectation for a reading of 75.5% (which would have been unchanged from the initially reported December figure). The January figure is 4.6%-pts below its long-run (1972-2016) average. The rate of capacity in manufacturing edged up 0.1%-pt in January to 75.1%. This measure has fluctuated in a relatively narrow range for the past 5 months.

In the factory sector, production was significantly restrained by a 2.9% m/m decline in the output of motor vehicles and parts. Apart from this decline, manufacturing output elsewhere rose a solid 0.5%. And nondurable manufacturing production rose 0.6% m/m, led by textiles and chemicals. Production of consumer goods slipped 0.8% m/m (-0.1% y/y) in January following a 1.4% m/m jump in December. The January decline reflected a drop in both consumer energy products (-6.5% m/m) and consumer durables (again led by auto weakness). Production of business equipment edged up 0.1% m/m (1.2% y/y) on top of a 0.8% m/m gain in December. Output of transit equipment fell 1.5% m/m while production of IT equipment jumped 1.0% m/m. And production of construction supplies jumped 0.9% m/m (0.6% y/y) after having fallen 0.5% m/m in December.

The drop in materials output in January was dominated by a 1.4% m/m decline in production of energy, offsetting a 1.4% m/m rise in December. Output of non-energy materials rose 0.5% m/m after a 0.3% m/m decline in December.

In the special industrial output groupings, output in high-technology industries was unchanged m/m in January following a 0.7% m/m increase in December. Output excluding that in high-tech industries was up 0.3% m/m in January on top of a 0.1% m/m increase in December.

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 2016 2015 2014
Total Output -0.3 0.6 -0.2 0.1 -1.0 0.3 2.9
Manufacturing 0.2 0.2 0.0 0.4 0.1 0.8 1.3
    Consumer Goods -0.8 1.4 -0.9 -0.1 0.7 1.4 0.7
    Business Equipment 0.1 0.8 -0.5 1.2 -089 0.7 2.4
    Construction Supplies 0.9 -0.5 0.8 0.6 1.1 1.5 3.7
  Materials -0.2 0.2 0.0 -0.1 -2.0 0.5 4.7
Utilities -5.7 5.1 -2.5 -2.7 -0.2 -0.7 1.3
Mining 2.8 -1.4 0.2 0.4 -9.3 -1.8 11.0
Capacity Utilization (%) 75.3 75.6 75.2 75.7 75.4 76.7 78.2
 Manufacturing 75.1 75.0 74.9 75.5 75.0 75.5 75.4
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