U.S. Motor Vehicle Production Slumped Again in January

Industrial production surged 1.4 percent in January but much of the gain was due to a surge in utilities output as cold weather gripped the country.

Production of cars and trucks, which has suffered mightily since the pandemic struck and continues to be hampered by a shortage of computer chips, declined for the second consecutive month. Motor vehicle parts and output fell 0.9 percent in January after declining 0.4 percent in December.

Compared with a year ago, auto production is down 7.5 percent. Compared with February of 2020, the last month not impacted by the pandemic, output is down nearly 16 percent.

Overall manufacturing output rose 0.2 percent in January, reversing the 0.1 percent decline in December. Machinery production jumped 1.1 percent for a 4.7 percent annual gain. Production of business equipment excluding motor vehicles rose 0.4 percent and consumer goods output excluding autos also rose 0.4 percent.

Capacity utilization rose sharply, climbing to 77.6 percent in January from 76.6 percent in the prior month. The capacity utilization rate reflects the limits to operating the nation’s factories, mines, and utilities. It is the highest rate since early 2019, when capacity utilization came close to 80 percent. Economists had forecast the rate to be unchanged with the prior month.

But capacity utilization in manufacturing has largely been unchanged for three months. This likely reflects the difficulty factories have had finding workers. It also foreshadows ongoing inflationary pressures.

Mining output, which includes oil and natural gas extraction, rose 1 percent after a 1.5 percent gain in the prior month. Oil and gas well drilling advanced 6.2 percent and the index in January was nearly 50 percent above its year-earlier level. But it still remains about 14 percent below its pre-pandemic reading.