As unseasonably warm weather led to another steep drop in utilities output, the Federal Reserve released a report on Friday showing a continued decrease in U.S. industrial production in the month of January.
The Fed said industrial production fell by 0.3 percent in January following a revised decrease of 0.4 percent in December.
Economists had expected industrial production to dip by 0.2 percent compared to the 0.3 percent drop originally reported for the previous month.
The slightly bigger than expected decrease in production came as utilities output plunged by 4.0 percent in January after plummeting by 6.2 percent in December.
Manufacturing output also edged down by 0.1 percent in January after inching up by 0.1 percent in December, as Boeing (BA) significantly slowed production of civilian aircraft amid the grounding of its troubled 737 Max.
The Fed noted manufacturing output increased by 0.3 percent when excluding the production of aircraft and parts.
Meanwhile, the report said mining output jumped by 1.2 percent in January after surging up by 1.5 percent in December.
“Looking ahead, the supply chain challenges posed by the coronavirus and Boeing production halt will combine with the steadfast headwinds from weak global growth and protectionist trade policies to prevent a resuscitation of manufacturing activity,” said a note from economists at Oxford Economics.
“Energy activity will stay soft as oil prices are unlikely to firm amid a soft global growth environment,” they added. “We therefore expect industrial production growth to stagnate this year.”
The Fed said capacity utilization for the industrial sector fell to 76.8 percent in January from 77.1 percent in December, matching economist estimates.
Capacity utilization in the utilities sector slumped to 70.6 percent from 73.8 percent, while capacity utilization in the manufacturing sector edged lower and capacity utilization in the mining sector crept higher.
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