Manufacturing production increased last month, according to the Federal Reserve. NAM Chief Economist Chad Moutray laid it out for us.
The topline numbers: “ Manufacturing production rose 0.2% in January, rebounding slightly after edging down 0.1% in December,” said Moutray. “Durable and nondurable goods both increased 0.2% for the month. Speaking to the softness of the latest data, manufacturers have been challenged by supply chain bottlenecks, workforce shortages, rising production costs and, more recently, the spread of the omicron variant. Nonetheless, manufacturing capacity utilization inched up from 77.2% in December to 77.3% in January, matching the rate in November, which was the strongest since December 2018. Overall, manufacturing production has risen 2.5% year-over-year, with 2.0% growth relative to February 2020’s pre-pandemic pace.”
The details: “The underlying manufacturing data provided mixed results,” said Moutray. “Sectors with the largest increases in January included textile and product mills (up 1.4%), miscellaneous durable goods (up 1.4%), machinery (up 1.1%), aerospace and miscellaneous transportation equipment (up 0.9%) and food, beverage and tobacco products (up 0.9%), among others. At the same time, the biggest declines in output for the month occurred in petroleum and coal products (down 1.5%), printing and support (down 1.4%), motor vehicles and parts (down 0.9%), nonmetallic mineral products (down 0.7%) and apparel and leather (down 0.6%).”
Chip woes: “The chip shortage has challenged the motor vehicles and parts sector significantly over the past 12 months,” said Moutray. “Output had rebounded by 11.2% and 1.7% in October and November, respectively, before pulling back by 0.4% and 0.9% in December and January. Since January 2021, motor vehicles and parts production has declined 6.2%.”
The long term: “Ten (or half) of the major manufacturing sectors have experienced increased production since February 2020,” said Moutray. “This included sizable gains in output post-pandemic in aerospace and miscellaneous transportation equipment (up 13.1%), computer and electronic products (up 8.5%), miscellaneous durable goods (up 7.2%), chemicals (up 7.1%) and machinery (up 7.0%), among others.”
The big picture: “Meanwhile, total industrial production increased 1.4% in January, bouncing back from the 0.1% decline in December,” said Moutray. “The industrial production index was the highest since December 2018. Mining and utilities production rose 1.0% and 9.9% in January, respectively, with the latter benefiting from cold weather conditions. On a year-over-year basis, industrial production has increased 4.1%, with mining and utilities output up 8.2% and 9.3% over the past 12 months, respectively. Total capacity utilization jumped from 76.6% in December to 77.6% in January, the best since May 2019.”