WASHINGTON - Harsh winter weather led to a steep drop in U.S. factory output in January. Manufacturers made fewer cars and trucks, appliances, furniture and carpeting, as the recent cold spell ended five straight months of increased production
The Federal Reserve said factory production plunged 0.8 percent in January, reversing gains of 0.3 percent in
both December and November. Automakers lost days of production because of
snowstorms, as their production plummeted 5.1 percent, the report said.
Factory output rose a modest 1.3
percent over the past 12 months.
Overall industrial production, which
includes manufacturing, mining and utilities, fell 0.3 percent in January.
Output for utilities rose 4.1 percent last month as the freezing temperatures
boosted heating demand.
Factories responded to the weather by
running at a lower 76 percent capacity, a 0.7 percentage point drop over the
month and 2.7 percentage points below the long-run average.
The repeated battery of winter storms
has slowed down the pace of economic growth, ending momentum that has boosted
gross domestic product in the second half of last year. Cold weather last month
delayed shipments of raw materials and caused some factories to shut down.
The Institute for Supply Management, a
trade group of purchasing managers, reported earlier this month that its index
of manufacturing activity fell to 51.3 in January from 56.5 in December. It was
the lowest reading since May, although any reading above 50 signals growth.
Factory orders also fell 1.5 percent
in December, according to the Commerce Department. That could have contributed
to less output in January.
The figures suggest that U.S.
manufacturing is slowing after strong gains at the end of last year. Auto sales
approached 15.6 million last year but buying has since decelerated. Businesses
are spending cautiously on machinery and other large factory goods. The
slowdown means that economic growth in the first three months of this year will
probably come in significantly below the strong 3.6 percent annual pace in the
second half of 2013.
The economic forecaster Macroeconomic
Advisers projected Thursday that growth this quarter would be 1.7 percent.