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Industrial Production: Utilities Fall, Leading Headline Lower

February 15, 2017
Bottom Line: Industrial activity fell in January after sharp gains in December. The headline number was driven higher by utility generation, which pulled back sharply after colder weather in December caused a spike. Looking outside the volatile mining and utilities sectors, the manufacturing sector is seeing a modest acceleration in growth, up 2% annualized in the last 3 months, faster than the 6-month pace of 1%, 2016's pace of 0.5% and sharply better than the contraction of 0.3% seen in 2015.

Industrial Production FELL by 0.3% in January, compared with market expectations for unchanged. Moreover, the prior month was revised from 0.9% down to 0.6%. Output is now 0.01% ABOVE its year ago level.

In January, Mining Output ROSE by 2.7%, and is now 0.4% ABOVE its year ago level. Utility Generation FELL by 5.7% and is now 2.7% BELOW its year ago level.

Manufacturing Output ROSE by 0.3% but is now only 0.4% ABOVE its year ago level. Output in high-tech industries was unchanged. Meanwhile, output in the motor vehicle industry fell by 2.9%. Excluding both the high-tech and motor vehicles industries, industrial output climbed by 0.5%.

Capacity Utilization FELL by 0.3 points to 75.3%, compared with market expectations for a higher decline to 75.4%. Moreover, the prior month was revised from 75.5% to 75.6%. Capacity utilization rate is now 0.4 percentage points below its year ago level and 4.7 percentage points below its long-run (1972–2015) average.