The numbers: U.S. industrial production was unchanged in January, the Federal Reserve reported Wednesday. Production has not increased since September.
The flat reading was below Wall Street expectations of a 0.4% gain, according to a survey by The Wall Street Journal.
Output in December was revised down to a 1% decline from the initial estimate of a 0.7% fall.
Capacity utilization slipped to to 78.3% in January from 78.4% in the prior month. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities. This is the lowest capacity level since September 2021.
Economists had forecast a 79% rate.
Key details: Manufacturing and mining recovered in January after two months of sharp declines.
Manufacturing rose 1% in January after a 1.8% drop in the prior month.
Motor vehicles and parts output rose 0.5% after a 1.7% decline in the prior month. Excluding autos, total industrial output unchanged.
Utilities output sank 9.9% in January due to warm weather. That follows a 5.1% gain in the prior month.
Mining output, which includes oil and natural gas, rose 1% after a 1.8% fall in the prior month.
Big picture: After showing strength throughout the pandemic, manufacturing has slipped into contraction territory. Higher interest rates have slowed business investment and there is a sense firms have been cutting back due to talk about a much-anticipated recession.
“The pandemic-induced boom in goods demand is decidedly in the rear-view mirror, and a challenging macroeconomic environment will lead factory output to fall in 2023,” said Oren Klachkin, an economist at Oxford Economics, in a recent note to clients.
Market reaction: Stocks
DJIA,
-0.51%
SPX,
-0.51%
opened lower on Wednesday after strong retail sales data. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.761%
jumped to 3.77%.
