Industrial Production Rises 0.5% in January Amid Aerospace Boom and Utility Surge

Industrial production increased by 0.5% in January, following a 1.0% rise in December. Growth was driven by a rebound in aircraft and parts production, contributing 0.2 percentage points to the total increase after resolving a prior work stoppage. However, manufacturing output declined by 0.1%, largely due to a 5.2% drop in motor vehicle and parts production. Mining output also fell by 1.2%, while utilities surged 7.2% as cold weather spiked heating demand. Total industrial production reached 103.5% of its 2017 average, standing 2.0% higher than the previous year. Capacity utilization rose to 77.8%, but remains below its long-term average.

Consumer goods output grew by 0.8%, led by nondurable goods, while business equipment rose 2.1%, driven by civilian aircraft production. Construction supplies dipped by 0.2%, whereas business supplies increased by 0.6%. Materials output inched up 0.1%, with energy material gains offsetting non-energy declines.

Manufacturing saw a mixed performance, with durable goods holding steady but nondurable goods falling by 0.3%. Mining declined after a December uptick, while utilities saw a sharp increase. Capacity utilization in manufacturing fell slightly to 76.3%, mining dropped to 89.5%, and utilities rose to 75.7%, still below historical norms.

Industrial Production Rises 0.5% in January Amid Aerospace Boom and Utility Surge

Industrial production saw a 0.5% increase in January, following a more substantial 1.0% rise in December. A key contributor to this growth was the production of aircraft and parts, which added 0.2 percentage points to the total increase. This uptick was largely due to the resolution of a prior work stoppage at a major aircraft manufacturing company. However, the manufacturing sector overall experienced a slight downturn, with output declining by 0.1%.

A significant drop of 5.2% in the production of motor vehicles and parts played a central role in this decline. Meanwhile, mining output contracted by 1.2%, while utility production surged by 7.2%, driven by increased heating demands amid colder temperatures. At 103.5% of its 2017 average, total industrial production in January was 2.0% higher than the same period the previous year. Capacity utilization improved to 77.8%, though this remains 1.8 percentage points below its long-term average from 1972 to 2024.

Most market groups recorded growth during January. The production of consumer goods climbed 0.8%, with a rise in nondurable consumer goods outweighing a decline in durable goods production. The increase in nondurables was fueled by strong performances in energy and chemical product segments. The business equipment sector expanded by 2.1%, largely propelled by a significant boost in civilian aircraft production. In contrast, construction supplies dipped by 0.2%, while business supplies increased by 0.6%. Materials output edged up by 0.1%, with losses in multiple non-energy categories being offset by improvements in energy materials.

The manufacturing sector’s overall output slipped by 0.1% in January. Durable goods manufacturing remained unchanged compared to December, as substantial gains in aerospace and miscellaneous transportation equipment counterbalanced declines in motor vehicle and parts production. The nondurable goods sector saw a 0.3% contraction, with declines in four key categories: food, beverages, and tobacco products; printing and support; petroleum and coal products; and plastics and rubber products. In contrast, the category for other manufacturing activities, including publishing and logging, experienced a 0.3% increase.

Mining output fell by 1.2% in January, reversing a 2.0% gain recorded in December. The utilities sector, however, posted a sharp 7.2% rise in production. Specifically, the electric utility output grew by 6.1%, while natural gas utility production soared by 15.4%.

Capacity utilization within the manufacturing sector dipped by 0.1 percentage points to 76.3% in January, positioning it 1.9 percentage points below its long-term average. Meanwhile, the operating rate for mining fell by 1.1 percentage points to 89.5%, a figure that remains 3.0 percentage points above its historical average. On the other hand, utilities saw an increase in their operating rate, which climbed by 4.9 percentage points to 75.7%. Despite this improvement, utility capacity utilization continues to lag significantly behind its long-term trend.

In summary, industrial production continued to grow in January, albeit at a slower pace compared to December. While gains in the aerospace sector and utility production helped drive overall industrial growth, the decline in motor vehicle manufacturing and mining output tempered these gains. Despite the modest increase in capacity utilization, certain industries, particularly utilities, still operate below their long-term averages.