A newly released Federal Reserve report shows U.S. industrial production decreased 0.1 percent in January after rising 1.2 percent in December. The rise in some sectors was not enough to offset reductions in other key categories, the report finds.
Following are some highlights from the report on industrial production:
Market Groups. The production of consumer goods increased 0.1 percent in January. Within durables, the production of automotive products rose 3 percent and the output of miscellaneous consumer durables gained 0.6 percent. However, the index for home electronics decreased 0.8 percent while the indices for appliances, furniture, and carpeting fell 1.0 percent. Among consumer nondurables, the output of non-energy goods rose 0.2 percent, as solid gains in clothing, chemical products, and paper products were partly offset by a decline in the production of foods and tobacco products. The output of consumer energy products fell 2.0 percent in January after rising 5.4 percent in December. The decline in energy production in January reflected drops both in the production of fuels and in residential sales by electric and natural gas utilities.
Some bright spots: The output of business equipment rose 0.9 percent in January, and all of its major component indexes increased: Transit equipment advanced 1.2 percent, information processing equipment increased 0.6 percent, and industrial and other equipment gained 1.0 percent. The output of business equipment has risen in each of the past 11 months and in January stood 11.4 percent above its level 12 months earlier. Additionally, the production of defense and space equipment moved up 1.2 percent in January after having declined, on balance, over the previous four months.
Industry Groups. Manufacturing output rose 0.3 percent in January on the heels of a 0.9 percent increase in December. The output of durable goods moved up 0.6 percent, with a large gain seen in the index for motor vehicles and parts. Meanwhile, smaller increases were recorded for many other industries, including fabricated metal products, machinery, computer and electronic products, aerospace and miscellaneous transportation equipment, furniture and related products, and miscellaneous manufacturing. Output decreased for several categories, including: wood products; nonmetallic mineral products; primary metals; and electrical equipment, appliances, and components. The capacity utilization rate for total industry edged down to 76.1 percent, a rate 4.4 percentage points below its average from 1972 to 2010.
The Federal Reserve’s report on industrial production strikes a different tone than another survey gauging the health of the manufacturing sector. According to the Institute of Supply Management, whose PMI Index registered 60.8, economic activity in the manufacturing sector expanded in January for the 18th consecutive month. This was the highest level since May 2004, when the index registered 61.4 percent. According to the survey, 14 out of 18 sectors reported growth during the period. Among them: Petroleum & Coal Products; Primary Metals; Apparel, Leather & Allied Products; Wood Products; Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; Machinery; Paper Products; Miscellaneous Manufacturing; Chemical Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components.
"The continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector,” said Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004. Global demand is driving commodity prices higher, particularly for energy, metals and chemicals."
The complete January U.S. industrial production report and the latest PMI Survey are available online.