Industrial Production Unchanged, But Durable Manufacturing Activity Higher

The Federal Reserve Board reported that industrial production was unchanged in January, but manufacturing activity grew 0.7 percent. The growth in manufacturing production stemmed from higher durable goods activity, which was up 1.8 percent. Nondurable production fell 0.2 percent, but that follows the robust 1.5 percent gain of December. Meanwhile, manufacturers’ capacity utilization rate rose from 76.9 percent to 77.4 percent.

Industrial production remains 3.4 percent higher year-over-year. The fact that it was unchanged was due to less activity in the mining (down 1.8 percent) and utilities (down 2.5 percent) sectors.

For the manufacturing sector, production was 4.7 percent higher in January 2012 than in January 2011, with durables (up 8.3 percent) outpacing nondurables (up 1.1 percent). The largest monthly gains were in motor vehicles and parts (up 6.8 percent), machinery (up 2.2 percent), miscellaneous durable goods (up 2 percent) and apparel and leather products (up 1.9 percent). Declining sectors included petroleum and coal products (down 2.3 percent), wood products (down 1.5 percent) and nonmetallic mineral products (down 1.1 percent). 

Overall, these figures show a strong rebound in the manufacturing sector, with large increases in production in the last two months. To help illustrate this, the December figure was revised upward, now showing a gain of 1.5 percent for manufacturing production. With industrial production expected to grow at a moderate pace this year, manufacturers are helping to drive much of that growth.

While a number of significant headwinds might derail these predictions – including the developments in Europe – manufacturers by-and-large remain optimistic about activity over the coming months.

Chad Moutray is chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

Join the discussion One Comment

  • It’s certainly good news that three of your blogs in the past two days expressed confidence in a rebound in manufacturing… Hopefully a sign that the economy is finally, truly recovering…

    Claudius Jaeger
    Artemis Rubber

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