Bloomberg News / Landov
Launched 27 boats at Winnebago Industries Inc. Chris-Craft in Sarasota, Florida. The industrial output sank 0.6% in January for eight months, the Federal Reserve said on Friday. The decline is below Wall Street's expectations for flat reading.
Adding the feeling of weakness in the report, industrial production in December was reduced to 0.1
% profit from the initial estimate of 0.3% profit. declines, production remained 3.8% higher in January than it was a year earlier
Capacity utilization declined by 0.6 percentage points to 78.2% in January, the lowest level since last July.
What happened: In January all categories, except mining and communal, declined. Only manufacturing dropped by 0.9%, driven by a drop in the unstable automotive sector. Cars have fallen by 8.8% in January. Excluding cars, factory production fell by 0.2%.
Yield reached 0.1% in January. Production of utility services grew by 0.4%.
The economists did not think that the December industrial production report would be repeated in January, but not many of them called for the general weakness observed in the data. This may be a critical point for the factory sector, but the ISM's separate production index for January was stronger than in December.
The manufacturing sector is facing congestion by slowing global growth, trade strains and a strong dollar. The Empire State index, which is more forward-looking, is moderately positive.
What do they say? "Production is under real pressure from China's slowdown and the trade war, and we expect the output to collapse in the first half of the year, putting the sector in a slight recession. That will not kill the rest of the economy, but it will not look good, and as the sector retires at the end of spring, it will make the Fed's recent turn to look like the right move, "said Ian Sheppardson, chief economist at Pantheon Macroeconomics .
Market Reaction: Dow Jones Industrial Average
jumped by more than 350 points early Friday after US and Chinese trade talks showed progress Linked : The Empire State Index for the manufacturing index merged modestly in February