In January, manufacturing output in the United States experienced a decline for the first time in three months, with decreases observed in various sectors such as motor vehicles, machinery, and metals. The Federal Reserve attributed this downturn to adverse winter weather conditions, citing a 0.5% reduction in manufacturing output compared to a 0.1% increase in the previous month.

According to economists surveyed by Reuters, it was expected that factory output would remain unchanged. On a year-over-year basis, production at factories declined by 0.9% in January. Manufacturing, which represents 10.3% of the economy, maybe on the verge of recovery following a stagnant period in 2023, prompted by significant interest rate hikes by the US central bank since March 2022. However, a recent survey by the Institute for Supply Management revealed a slight contraction in manufacturing PMI in January.

The output of motor vehicles and parts decreased by 0.2% last month after experiencing a 3.2% increase in December. Durable goods manufacturing production saw a slight uptick of 0.1%. Notably, there were notable increases in the production of electrical equipment, appliances, components, aerospace, and miscellaneous transportation equipment.

While the output of computer and electronic products rose, driven by semiconductor production, the output of nonmetallic mineral products and primary metals declined. Nondurable goods production witnessed a notable drop of 1.1%, primarily due to weather-related declines in petroleum and coal, chemicals, plastics, and rubber products.

In the mining sector, output fell by 2.3%, influenced by adverse weather conditions affecting oil and gas extraction as well as coal production. However, mining production had increased by 0.9% in December. Meanwhile, utilities production rebounded by 6.0% due to increased demand for heating during freezing temperatures, following a 1.7% decline in December.

Overall industrial production experienced a slight decrease of 0.1% in January after remaining unchanged in December. Year-over-year, industrial production showed no change in January. Capacity utilization for the industrial sector declined by 0.2 percentage points to 78.5%, while the operating rate for the manufacturing sector decreased to 76.6% from 77.1% in December.