February 14, 2025
Industrial production for January rose 0.5% after having jumped 1.0% in December after having declined 0.1 in November. As indicated below, the manufacturing sector declined slightly as car production fell sharply. The January increase was attributable to a dramatic 7.2% increase in utility output as the bitter cold weather boosted utility output.
Breaking industrial production down into its three basic categories — manufacturing, mining, and utilities. Manufacturing production declined 0.1% in January after having risen 0.5% in December and 0.2% in November. In the past year manufacturing output has risen 1.0%.
In the motor vehicle sector production plunged 5.2% after having declined 1.6% in December after having risen 3.4% in November. In the past year it has declined 5.9%. This category is very volatile on a month-to-month basis.
Excluding the motor vehicle sector, manufacturing output excluding the volatile motor vehicle category rose 0.2% after having climbed 0.7% in December and having been unchanged in November. In the past year it has risen 1.6%.
High tech production rose 0.2% in January after having risen 0.3% in December after having declined 1.4% in November High tech production has risen 6.2% in the past year. We would suggest that if firms are unable to find an adequate supply of workers, they will turn to technology in an effort to boost production and satisfy the demand for their products. At the same time firms are all experimenting with AI in an effort to figure out how it might help them boost productivity. Thus, we expect high tech production to continue to climb rapidly in the months ahead.
Mining (14%) output declined 1.2% in January after having risen 2.0% in December and declining 0.7% in November. Mining has risen 3.4% in the past year.
Utilities output surged by 7.2% in January as bitter cold weather gripped much of the country, after having risen 2.9% in December after having declined 1.8% in November. Over the past year utility output has risen 6.9%. This component is extremely volatile from month-to-month as the weather fluctuates.
Capacity utilization in the manufacturing sector declined 0.2% to 76.3% after having risen 0.3% in December and 0.1% in November. The utilization rate is currently a bit below the 77.4% level that is generally regarded as effective full capacity utilization.
Stephen Slifer
NumberNomics
Charleston, SC
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