After having increased 1.5% in December, manufacturing output rose 0.7% in January, the Federal Reserve reported on Feb. 15. However industrial production overall was flat in January.
The production of durable goods advanced 1.8% in January with output of motor vehicles and parts increasing 6.8% following an upwardly revised increase of 3.8% in December.
In January, gains of more than 1% were recorded for fabricated metal products; machinery; computer and electronic products; electrical equipment, appliances, and components; furniture and related products; and miscellaneous manufacturing. The output of aerospace and miscellaneous transportation equipment edged up 0.1%, while production decreased for wood products, nonmetallic mineral products, and primary metals.
Nondurable manufacturing declined 0.2% in January after having advanced 1.5% in December.
"The strong manufacturing production performance in January was led by the motor vehicle industry, however even excluding motor vehicles, manufacturing production increased 0.3% last month, and 14 of the 20 major manufacturing industries posted growth," said Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI).
An important growth driver is pent-up demand," Meckstroth noted. "After years of postponing big ticket purchases, consumers have to replace motor vehicles. Businesses also have pent-up need for business equipment. So much capacity was eliminated during the 2008-2009 recession that even the moderate manufacturing recovery so far has rapidly pushed up the capacity utilization rate from 65% at the depths of the recession to 77% in January 2012, only a couple of percentage points from the pre-recession factory usage rate. MAPI continues to forecast faster growth in manufacturing production than in the economy as a whole this year and next."
