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Economy in Brief

U.S. Industrial Production Rebounded in January
by Sandy Batten  February 16, 2022

• Industrial production rose 1.4% m/m to 2.1% above pre-pandemic level.

• Led by utilities with manufacturing output up just 0.2% m/m, likely held down by Omicron absences.

• Capacity utilization rises to above pre-pandemic level.

Industrial production rebounded much more than expected in January, rising 1.4% m/m (+4.1% y/y) to stand 2.1% above its pre-pandemic level. IP had fallen 0.1% m/m in December. The Action Economics Forecast Survey had looked for a 0.4% rise in January. The headline increase hid a likely hit from the Omicron wave, which accelerated markedly during January. Manufacturing output edged up only 0.2% m/m (+2.5% y/y) in January following a 0.1% m/m decline in December as extensive Omicron-related employee absences during December and January disrupted production. A much colder-than-normal January boosted utilities output by 9.9% m/m (9.3% y/y), the largest monthly gain on record, following a 1.8% m/m decline in December. Mining output rose 1.0% m/m in January (+8.2% y/y), its fourth consecutive monthly increase.

The modest January increase in manufacturing output was equally distributed across durable and nondurable manufacturing goods with each rising 0.2% m/m in January. Among durables, motor vehicle production slumped 0.9% m/m (-6.2% y/y), its fourth monthly decline in the past six months. Excluding motor vehicle output, other manufacturing output increased 0.3% m/m (+3.2% y/y) in January after a 0.1% drop in December. Production of high-tech industries was unchanged in January from December (+5.3% y/y) after having increased 0.6% m/m in each of the preceding two months. Production of computer and peripherals slumped 1.2% m/m in January while output of communications equipment rose 0.5% m/m. Machinery output increased 1.1% m/m in January on top of a 0.9% m/m gain in December.

Production of nondurable goods in January was restrained by a 1.5% m/m drop in output of petroleum and coal products, the same monthly decline as in December, and a 0.6% m/m decline in apparel output, its third consecutive monthly decrease. Food and beverage production increased 0.9% while textile output jumped up 1.4% m/m.

With winter temperatures unusually cold during January, utilities production surged 9.9% m/m following a 1.8% m/m decline in December. Electric power output jumped up 7.6% m/m in January after a 0.8% m/m decline in December while natural gas distribution surged 24.2% m/m in January, the third largest monthly increase on record, following a 7.8% m/m decline in December. Mining activity increased 1.0% m/m but when oil and gas production are excluded, it fell 1.4% m/m.

The rate of capacity utilization jumped a full percentage point to 77.6% in January, the highest reading since May 2019, from 76.6% in December. A utilization rate of 76.8% had been expected. In manufacturing, the utilization rate inched up to 77.3% in January, tying November 2021 for the highest reading since December 2018, from 77.2% in December.

Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.

Industrial Production (SA, % Change) Jan Dec Nov Jan Y/Y 2021 2020 2019
Total Output 1.4 -0.1 0.9 4.1 5.5 -7.2 -0.8
Manufacturing 0.2 -0.1 0.7 2.5 6.3 -6.6 -2.0
   Durable Goods 0.2 -0.1 1.0 2.7 8.5 -8.2 -2.1
     Motor Vehicles & Parts -0.9 -0.4 1.7 -6.2 8.6 -15.7 -3.0
     Selected High Tech Equipment 0.0 0.6 0.6 5.3 10.6 7.1 3.9
   Nondurable Goods 0.2 0.0 0.5 2.8 4.3 -4.4 -1.8
Utilities 9.9 -1.8 2.6 9.3 2.1 -3.4 -0.8
Mining 1.0 1.5 0.6 8.2 2.9 -14.2 5.9
Capacity Utilization (%) 77.6 76.6 76.7 75.0 75.4 71.6 77.4
   Manufacturing 77.3 77.2 77.3 75.6 75.8 71.2 75.8
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