Manufacturing output fell 0.5 percent in January amid severe winter weather conditions, according to the Federal Reserve.
A strong storm struck much of the country from Jan. 8-10. The storm dropped more than a foot of snow in Iowa, South Dakota, Nebraska, Wisconsin and Kansas; it caused flooding across the Northeast and blizzard conditions in the Northwest. Also last month, record-setting cold was reported from Montana to Texas.
The index for utilities increased 6 percent as demand for utilities increased amid cold temperatures following mild conditions in December. Mining output reportedly fell 2.3 percent amid a weather-related drop in oil and gas extraction and a decrease in coal production.
Industrial production dropped 0.1 percent in January. At 102.6 percent of its 2017 average, total industrial production last month was reportedly identical to its year-earlier mark. Capacity utilization for the industrial sector dropped 0.2 percentage points last month to 78.5 percent, which is 1.1 percentage points below its long-term average.
“The major market groups posted mixed results in January,” according to the Federal Reserve. “The index for consumer goods rose 0.6 percent with modest gains in its durable and nondurable components. The indexes for business equipment, construction supplies and business supplies all declined less than 1 percent; the index for construction supplies was 4.1 percent below its year-earlier level.”
The index for durable manufacturing increased 0.1 percent, while the index for nondurable manufacturing fell 1.1 percent. The index for publishing and logging manufacturing fell 0.2 percent.
“Among durables, the largest gains were recorded in electrical equipment, appliances and components as well as in aerospace and miscellaneous transportation equipment,” according to the Federal Reserve. “Computer and electronic products also moved up in January, in part based on the continued strength in semiconductor production. Nonmetallic mineral products and primary metals recorded declines of around 1 percent.
“Declines were widespread among nondurables, with notable weather-related decreases in the indexes of petroleum and coal products, chemicals and plastics and rubber products.”
The output of space and defense equipment increased last month and was more than 13 percent above its year-earlier level. Materials output fell 0.4 percent in January as the non-energy component dropped 0.7 percent. The energy component increased 0.1 percent.
Manufacturing capacity utilization fell to 76.6 percent in January, which is 1.6 percentage points below its long-term average. The operating rate for mining fell 2.3 percentage points to 92.2 percent, which is 5.7 percentage points higher than its long-term average. The utilities operating rate increased 4 percentage points to 74.2 percent, which is 10 percent lower than its long-term average of 84.4 percent.
Industrial capacity is expected to rise 1.7 percent this year after increasing 1.5 percent in 2023. Manufacturing capacity is also expected to increase 1.7 percent this year, after rising 1.3 percent last year. Electric and natural gas utilities capacity is expected to rise 3.6 percent this year after increasing 3.5 percent in 2023. Capacity in the mining sector is projected to rise 0.7 percent in 2024 after falling 0.4 percent in 2023.