Industrial production falls in January

By Reuters
Posted Feb. 16 at 8:23 a.m.

U.S. industrial output unexpectedly fell in January as a return to normal winter temperatures caused a sharp fall in utility output, while production from mines also fell, a Federal Reserve report showed on Wednesday.

Industrial production fell 0.1 percent in January after an upwardly revised 1.2 percent jump in December, which had been driven by unseasonably cold weather that spiked heating demand.

The drop was the first decline in output since June 2009 and was well below the median forecast for a 0.5 percent increase in a Reuters poll of economists after December’s originally reported 0.8 percent gain.

Utility output fell by 1.6 percent in January after a 4.1 percent leap in December, while mining output fell 0.7 percent. Manufacturing output in January grew just 0.3 percent after an upwardly revised 0.9 percent gain in December.

Capacity use, a measure of how fully firms are using their resources, dipped to 76.1 percent from an upwardly revised 76.2 percent. Economists polled by Reuters had predicted a 76.3 percent capacity use rate.

Officials at the Fed tend to look at utilization measures as a signal of how much “slack” remains in the economy — how far growth has room to run before it becomes inflationary.

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