Industrial production in the United States fell sharply in January joining retail sales, payrolls and a list of other statistics whose sectors have been damaged by the harsh winter weather.
The output of factories, mines and quarries and public utilities skidded 0.3 percent reported the Federal Reserve, following December’s 0.3 percent rise. Economists had predicted a 0.2 percent gain. It was the largest monthly drop in production in almost a year and a half and the biggest month to month decline since December 2012.
Capacity utilization, the percentage of the nation’s industrial plant that is in use, dropped 0.4 percent to 78.5 percent well below the 79.3 prediction. The December result was revised 0.3 percent down to 78.9 percent form 79.2 percent.
Manufacturing output declined 0.8 percent in January and the prior month was revised down 0.1 percent to 0.3 percent. The median analyst’s prediction was for a 0.1 percent increase.
Since the beginning of the month a number of major statistics for January have come in far beneath forecasts. Manufacturing ISM was 51.3 on a prediction of 56.0; total vehicle sales were 15.16 million annualized with a forecast of 15.7 million; non-farm payrolls were 113,000 on an 180,000 forecast; private payrolls were 142,000 instead of 185,000; retail sales fell 0.4 percent opposing the flat prediction and industrial production and capacity utilization were as above.
Most analysts have surmised that the bitter winter weather and recurring snowstorms in much of the country have adversely affected production. Has cold weather shut or hampered production?
In support of the notion that there is a temporary slowdown are the consumer coincidence and consumer credit figures which have remained relatively strong.
Today's University of Michigan preliminary consumer confidence number for February was 81.2, a point above the 80.2 forecast and matching the January level. The measure of the current situation fell to 94.0 from 96.8 but the expectations quotient rose to 73.0 from 71.2.
The Conference Board consumer confidence reading was 80.7 in January up from 77.5 in December and the estimate for January which will be released on the 25th is 80.8.
The total consumer indebtedness, which is a good indication of household economic outlook, rose by $18.76 billion in December half again as much as the $12.0 billion forecast and November’s $12.39 billion addition. Revolving credit, primarily credit cards shot up from 0.46 billion in November to $5.01 billion in December. Non-revolving credit rose to $13.75 billion from $11.93 billion in November.
Is the January swoon and February’s presumed continuation due to the weather or is something more fundamental, perhaps related to stagnant wages and a weak labor market, going on?
We will not really know until early March, when the first February numbers will begin to be issued.
Chief Market Strategist
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