Factory Production in U.S. Climbed Less Than Forecast in January

The 0.2 percent increase in output followed no change in December that was initially reported as a gain, data from the Federal Reserve showed Wednesday in Washington. The median estimate in a Bloomberg survey of economists called for a 0.4 percent advance. Total industrial production, which includes mining and utilities, also rose 0.2 percent.

Factories in the U.S. are tempering production as flagging global growth prompts overseas customers to pare orders. At the same time, persistent employment gains and cheaper energy costs will help underpin domestic demand and keep manufacturing from faltering.

Factories probably will see “some further slowing in U.S. manufacturing sector momentum as the economy continues to navigate against the headwinds from the strong dollar and weakening global activity,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities LLC in New York, said in a research note before the report.

Among other reports Wednesday, new residential construction in the U.S. fell in January as builders broke ground on fewer single-family homes. Housing starts decreased 2 percent to a 1.07 million annual rate, following the prior month’s 1.09 million, according to Commerce Department data.

The producer-price index decreased 0.8 percent in January after a 0.2 percent decline the prior month, according to a separate report from the Labor Department.

December Production

Manufacturing output, which accounts for about 12 percent of the economy, was previously reported as rising 0.3 percent in December. Total industrial production was forecast to increase 0.3 percent in January.

Capacity utilization, which measures the amount of a plant that is in use, was unchanged at 79.4 percent last month.

Utility output climbed 2.3 percent after a 6.9 percent drop in December.

Mining production, including oil drilling, decreased 1 percent in January after a 2.1 percent advance in December. Drilling and servicing at wells slumped 10 percent, the fourth straight decline.

After several months of falling energy costs, oil companies, including Houston-based Apache Corp., are paring production. The “dramatic and almost unprecedented” price plunge prompted the company to cut operating rigs by 70 percent by the end of this month, Chief Executive Officer John J. Christmann said on an earnings call last week.

Consumer Goods

Consumer-goods output rose 0.2 percent in January after a 0.8 percent decrease. Factory production of motor vehicles and parts fell 0.6 percent after a 1.3 percent decline. Auto assemblies slowed to an 11.76 million annualized rate after 11.93 million a month earlier, the Fed said.

Excluding autos and parts, manufacturing output rose 0.2 percent after rising 0.1 percent the prior month.

Sales of cars and light trucks eased to a 16.6 million annualized rate in January after 16.8 million in December, according to figures from Ward’s Automotive Group. Last month was still stronger than the 16.4 million monthly average in 2014.

Production of construction supplies decreased 0.3 percent in January after a 1 percent surge.

Business equipment production rose 0.8 percent following a 1.2 percent decrease, the Fed’s report showed.

The Institute for Supply Management’s manufacturing index showed similar results in January. The gauge declined to a one-year low of 53.5 from December’s 55.1, according to the Tempe, Arizona-based group. Readings greater than 50 signal growth.

To contact the reporter on this story: Michelle Jamrisko in Washington atmjamrisko@bloomberg.net

To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.netVince Golle

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