I somehow overlooked the release yesterday of the January industrial production figures, but that’s no reflection on the results’ importance. For they not only revealed that U.S. inflation-adjusted manufacturing output growth has ground to a near halt for the last two months, and has slowed markedly after rebounding strongly after last autumn’s hurricanes. They showed that this weak performance, along with negative revisions, pushed such production farther below its pre-recession peak. Here are the manufacturing highlights of yesterday’s Federal Reserve report:
>According to the Federal Reserve, real sequential growth in U.S. manufacturing in January was a mere 0.08 percent. Combined with a December figure now revised from similar negligible growth to a slight dip, and other negative revisions, domestic industry’s expansion has now slowed to a near-standstill. Moreover, the impressive rebound from last autumn’s hurricane-related setbacks has now petered out.
>December’s manufacturing output figure was downgraded from a 0.08 percent monthly increase to a 0.02 percent contraction. November’s 0.31 percent sequential growth is now judged to be 0.25 percent, and October’s monthly post-hurricane 1.50 percent bounce-back has been reduced to 1.37 percent growth.
>As a result, whereas last month’s industrial production report, reported American domestic manufacturing as 2.25 percent smaller in price-adjusted terms than at its pre-recession peak (reached in December, 2007), it’s now 2.43 percent below that level.
>Constant dollar output in the durable goods super-sector of manufacturing advanced by 0.15 percent on month in January – meaning that its growth has slowed for four straight months. Revisions here were also negative.
>December’s real durable goods production improvement was revised down from 0.27 percent to 0.23 percent, November’s from 0.43 percent to 0.41 percent, and October’s from 0.54 percent to 0.49 percent.
>A similar story has unfolded for the non-durable goods super-sector. Its month-to-month real output was up fractionally in January, and recent months’ revisions were downgrades.
>December’s 0.12 percent monthly after-inflation output dip is now judged to be a 0.29 percent decline, November’s 0.17 percent increase is now estimated at 0.08 percent, and October’s post-hurricane rebound has been revised down from 2.57 percent to 2.34 percent. (Non-durables’ output was most greatly affected by the hurricanes.)
>Year-on-year, manufacturing’s price-adjusted January growth of 2.03 percent was its worst such performance since September’s (hurricane-affected) 1.37 percent.
>In addition, the December monthly downgrade brought the full-year 2017 real growth rate down from 2.64 percent (its best since 2011’s 2.71 percent) to 2.38 percent (now only the best since 2012’s 2.58 percent).
>Durable goods’ yearly January growth was 2.47 percent – its slowest such growth since September’s 2.41 percent.
>Further, its December downward revision also depressed its full-year 2017 growth from 2.65 percent to 2.59 percent. That’s only a post-2014 (2.72 percent) high.
>In non-durable goods, January’s year-on-year growth was 1.56 percent – its worst such performance since September’s hurricane-impacted 0.13 percent.
>For full-year, 2017, its growth is now pegged at 2.14 percent, not the 2.64 percent reported last month.
>That yearly performance is still the best for non-durables since 2004’s 3.95 percent.
>In the automotive sector, which led manufacturing’s strong initial recovery from its deep recessionary dive, real production rose by 0.58 percent sequentially in January. But that strong figure was just over half December’s 1.13 percent.
>Worse, the January figures mean that real automotive output remained in technical recession – that is, six or more months of cumulative decline. The sector is now 0.27 percent smaller than in April, 2017.