The Federal Reserve said that manufacturing production was unchanged in January for the second straight month. As such, output in the sector essentially has taken a pause at the beginning of 2018, but we would anticipate that breather to be short-lived. Indeed, we would expect manufacturing production to rise by 2.1 percent in 2018, up from 1.7 percent in 2017. In terms of the latest data, manufacturing production rose by 1.8 percent since January 2017, slowing from the more robust 2.3 percent pace seen in November, which likely represented a rebound in the aftermath of several hurricanes. Much like the headline number, manufacturing capacity utilization was flat in January’s report, unchanged at 76.2 percent.
In January, durable goods manufacturing production rose by 0.2 percent, with flat growth in nondurable goods output. The underlying sector-by-sector data were—not surprisingly—mixed. The largest monthly increases in the sector were in the computer and electronic equipment (up 1.3 percent), electrical equipment and appliances (up 1.0 percent), petroleum and coal products (up 0.9 percent), machinery (up 0.6 percent), motor vehicles and parts (up 0.6 percent), textile and product mills (up 0.6 percent) and chemicals (up 0.4 percent), among others. In contrast, production was lower in several sectors, including nonmetallic mineral products (down 2.1 percent), wood products (down 1.4 percent), miscellaneous durable goods (down 1.2 percent), printing and support (down 1.0 percent) and plastics and rubber products (down 0.5 percent).
Meanwhile, total industrial production edged down by 0.1 percent in January, falling for the first month since August. The decline stemmed from a pullback in mining production, off by 1.0 percent, with utilities output up 0.6 percent. Utilities benefited in the past two months from colder temperatures. Over the past 12 months, industrial production has risen 3.7 percent, more than double the year-over-year pace seen just four months ago. Mining and utilities output increased 8.8 percent and 10.8 percent year-over-year, respectively. In addition, capacity utilization dropped from 77.7 percent in December, its strongest rate since February 2015, to 77.5 percent in January.