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Economic Watch: Industrial Production Drops, Consumers Optimism Unchanged

Industrial production in the U.S. decreased 0.3% in January after having risen 0.3% in December, according to numbers from the U.S. Federal Reserve released on Friday. This decline in the total output from the nation’s factories, mines and utilities is the largest drop since May 2009.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
February 16, 2014
Economic Watch: Industrial Production Drops, Consumers Optimism Unchanged

 

2 min to read


Industrial production in the U.S. decreased 0.3% in January after having risen 0.3% in December, according to numbers from the U.S. Federal Reserve released on Friday.

This decline in the total output from the nation’s factories, mines and utilities is the largest drop since May 2009, but the level is 2.9% higher than a year earlier.

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Manufacturing output fell 0.8%, partly because of the severe weather that curtailed production in some regions of the country and due to a 5% decline in motor vehicle production. The overall drop in manufacturing is the biggest since April.

Manufacturing production is now reported to have been lower in the fourth quarter that first estimated. It is now estimated to have advanced at an annual rate of 4.6% in the fourth quarter rather than 6.2%

The output of utilities rose 4.1% in January, as demand for heating was boosted by unseasonably cold temperatures. The production at mines declined 0.9% following a gain of 1.8% in December.

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“No doubt winter weather took a toll on the U.S. manufacturing base impeding industrial capacity, but manufacturing activity showed signs of losing momentum in the fourth quarter, suggesting not all of the weakness was weather related,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Still, as winter storms subside, February is likely to bring a clearer sense of fundamental trends, as opposed to temporary weather disruptions, in several key components of the economy.”

Meantime, a measure of consumer sentiment about the economy shows they are as optimistic about the economy this month as they were in January, according to the Reuters/University of Michigan Consumer Sentiment Index, also released Friday.

It held at 81.6, despite a consensus poll of economists showing they expected it to move lower. Within the components, consumer expectations increased from 71.2 to 73 in February but current conditions slipped from 96.8 to 94, a three-month low.

“Consumers appear to be somewhat upbeat about the U.S. economy, or at least no more pessimistic than they were a month ago. Of course, other consumer sentiment indices have been more volatile with Bloomberg's comfort index showing the first increase in five weeks juxtaposed with the NY conference board's sentiment reporting a five-month high in January,” said Piegza.

“On net, consumers - like the market and the Fed - are trying to parse out the underlying trend in the economy as the recent slew of data suggests the economy took a significant misstep after gaining momentum in the early months of the fourth quarter of 2013,” she said.

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