U.S. Industrial Production Exceeds Expectations Again in January
Summary
- Jan. IP +0.5% (+2.0% y/y) following +1.0% (+0.5% y/y) in Dec.; IP Index highest since Sept. ’22.
- Mfg. IP -0.1% m/m, led by a 5.2% decrease in auto production (w/ durable goods virtually unchanged and nondurable goods down 0.3%).
- Utilities output jumps 7.2%, the largest m/m rise since Feb. ’21, while mining activity falls 1.2%, the fourth m/m decline in five months.
- Key categories in market groups mostly increase.
- Capacity utilization rises to a 5-month-high 77.8%.
Industrial production (IP) rose a larger-than-expected 0.5% m/m (2.0% y/y) in January following an upwardly revised 1.0% increase in December (+0.9% initially) and a downwardly revised 0.1% decline in November (+0.2% previously), data from the Federal Reserve Board showed. A 0.3% m/m January increase had been expected in the Action Economics Forecast Survey. The January IP index at 103.5 was the highest since September 2022; it was 4.5% above a low of 99.0 in September 2021 and 8.4% above a low of 95.5 in February 2021. The Federal Reserve estimated that increases in aircraft & parts output contributed 0.2 percentage point to January IP growth after the earlier resolution of the Boeing strike.
By industry groups, manufacturing production eased 0.1% (+1.0% y/y) in January following downwardly revised increases of 0.5% in December (+0.6% initially) and 0.2% in November (+0.4% previously). Durable goods production dipped 0.04% (+0.1% y/y) in January after rises of 0.6% in December and 0.8% in November. This reflected m/m output drops of 5.2% (-5.9% y/y) in motor vehicles & parts, 1.7% (+0.02% y/y) in primary metals, 0.2% (-1.3% y/y) in fabricated metal products, 0.1% (+2.2% y/y) in electrical equipment, appliances & components, and 0.1% (+1.3% y/y) in machinery. In contrast, the following durable goods categories rose m/m in January, including output increases of 6.0% (-0.1% y/y) in aerospace & miscellaneous transportation equipment, 1.9% (3.4% y/y) in nonmetallic mineral products, 1.5% (5.3% y/y) in computer & electronic products, 1.2% (4.7% y/y) in wood products, and 1.1% (-1.4% y/y) in furniture & related products. Notably, aircraft & parts production climbed 10.8% (-0.2% y/y), the third straight m/m increase, after an 11.5% December advance (the largest m/m gain since May 2020). Meanwhile, production for miscellaneous durables goods was essentially unchanged (-2.4% y/y) in January following two successive m/m rises.
Nondurable goods production fell 0.3% (+2.3% y/y) in January, down for the second month in three, after a 0.6% rise in December. The January fall reflected m/m output drops of 1.8% (+1.5% y/y) in printing & related support activities, 1.6% (-4.1% y/y) in plastics & rubber products, 0.2% (-0.1% y/y) in food, beverages & tobacco, and 0.1% (+4.3% y/y) in petroleum & coal products. To the upside, the following nondurable goods categories rose m/m in January, including output rises of 2.6% (-4.4% y/y) in apparel & leather goods, 0.7% (2.1% y/y) in textiles & product mills, and 0.1% (1.3% y/y) in paper. Meanwhile, production for chemicals was virtually unchanged (6.4% y/y) in January after a 0.2 decline in December.
Utilities output surged 7.2% (6.9% y/y) in January as cold weather boosted the demand for heating after an upwardly revised 2.9% rebound in December (+2.1% initially), registering the third m/m rise in four months and the largest since February 2021. Mining activity, however, decreased 1.2% (+3.4% y/y), down for the fourth month in five, following an upwardly revised 2.0% December increase (+1.8% initially).
By market groups, business equipment output advanced 2.1% (-0.5% y/y) in January, the largest of three consecutive m/m gains, on top of a 1.8% rise in December. Consumer goods output rose 0.8% (0.9% y/y) in January after a 0.3% rebound in December, reflecting a 3.0% decline (-5.5% y/y) in durable consumer goods and a 1.8% gain (2.7% y/y) in nondurable consumer goods. Materials production edged up 0.1% (2.9% y/y) following a 1.3% December rise and three straight m/m declines. Construction supplies production, however, fell 0.2% (+3.1% y/y) in January, the first m/m fall since September, following a 1.8% gain in December.
In special classifications, factory output of selected high-tech industries rose 0.2% (6.2% y/y) in January, the third m/m rise in four months, after a 0.3% increase in December (+1.1% initially). Manufacturing production excluding selected high-tech industries fell 0.2% (+0.9% y/y), the first m/m fall since October, following a 0.5% December rise, while manufacturing production excluding selected high-tech and motor vehicles & parts increased 0.2% (1.4% y/y) after a 0.7% December gain.
Capacity utilization rose to 77.8% in January, the highest since August, from a downwardly revised 77.5% in December (77.6% initially). The Action Economics Forecast Survey forecasted 77.7%. The January reading was 1.8 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization dipped to 76.3% in January from a downwardly revised 76.4% in December (76.6% initially); the January rate was 1.9 percentage points below its long-run average.
Industrial production and capacity data are 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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