The nation’s industrial production inched lower in January following a cutback in utility use, according to the Federal Reserve yesterday. Factory output climbed for a fifth consecutive month, though at a slower pace.

Industrial production in the United States decreased 0.1 percent in January, following a 1.2 percent rise in December, according to the Federal Reserve this week. Utilities and mining fell, while manufacturing, which makes up 75 percent of the total, rose 0.3 percent.

Economists had forecast a 0.5 percent gain in overall production, according to the median estimate of 80 economists surveyed by Bloomberg News.

At 95.1 percent of its 2007 average, total industrial production in January was 5.2 percent above its year-ago level. The capacity utilization rate for total industry edged down to 76.1 percent, a rate 4.4 percentage points below its 1972-2010 average.

The output of utilities fell 1.6 percent in January, as temperatures moved closer to normal. The output of utilities advanced 4.1 percent in December, when unseasonably cold weather boosted the demand for heating. The output of mines dropped 0.7 percent last month.

Meanwhile, factory activity slowed in January, as output in the manufacturing sector increased just 0.3 percent after an upwardly revised gain of 0.9 percent in December. Nonetheless, production at U.S. factories climbed for a fifth consecutive month in January. Excluding motor vehicles and parts, factory production rose 0.1 percent in January.

“Despite a small decline in overall industrial production, solid growth in the manufacturing sector continues to lead the recovery,” Thomas Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, wrote in an analysis of the Fed data. “Exports and business investment in areas like machinery and information technology, along with growing consumer demand for consumer durables like automobiles, are leading the sector higher.”

Output of business equipment inched up 0.9 percent in January, following a 1 percent rise the prior month, and all of its major component indexes increased.

Defense equipment production advanced 1.2 percent in January after having declined, on balance, over the previous four months.

Production of construction supplies fell 0.2 percent last month after remaining flat in December, while materials output dropped 0.4 percent in January.

Durable goods output increased 0.6 percent last month, while non-durables dropped 0.1 percent.

“The Manufacturers Alliance/MAPI expects the 12-month gains seen in manufacturing, at 5.5 percent, to be matched in the current year,” Duesterberg continued. “If relative weakness in the aerospace sector and in construction materials and supplies for the U. S. market were to turn around, we could see even stronger growth in 2011 and 2012.”

Recent reports reinforce projections for continued growth in manufacturing. The Institute for Supply Management’s factory index jumped last month to the highest level since May 2004. (See Manufacturing Grows at Faster Pace in January)

Measured fourth quarter to fourth quarter, total industrial capacity is projected to rise 1.2 percent in 2011 after having declined 0.3 percent in 2010.

Fed officials this week also revised their forecast for economic growth in 2011 to a range of 3.4 percent to 3.9 percent from their earlier estimate of 3 percent to 3.6 percent.

Related

Industrial Production Increases in December

Manufacturing Grows at Faster Pace in January

Resources

Industrial Production and Capacity Utilization – January 2011
The Federal Reserve, Feb. 16, 2011

Production in U.S. Probably Increased as Manufacturers Supported Expansion
by Shobhana Chandra
Bloomberg News, Feb. 16, 2011

…Despite Modest Overall Decline, Manufacturing Sector Still Shows Strength
by Thomas J. Duesterberg
The Manufacturers Alliance/MAPI, Feb. 16, 2011

Fed Officials Slightly More Upbeat on Economy
by Martin Crutsinger
The Associated Press, Feb. 16, 2011