January industrial production slipped

February 15, 2024

Industrial production fell 0.1% in January, falling short of expectations for a 0.2% increase. December was revised lower to no change from 0.1% previously reported.

Manufacturing output, which accounts for 75% of overall industrial activity, declined 0.5%, the largest drop in three months. The production of motor vehicles and parts decreased 0.2% in January. Several of the Detroit automakers recently announced a scaling back of electric vehicle (EV) production as sales are falling short of robust growth targets.

The transition to EVs is still happening. We could see record sales again in 2024. Still, the course correction is in response to the marketplace as hybrids remain several car lengths out in front of the competition. The weakness in January is a break from the strong gains in the previous two months which represented large catchups in production after the UAW strike was settled. Motor vehicles and parts output rose 3.2% in December and 7.2% in November, respectively. Other notable declines occurred in primary metals output, down 0.9%, machinery output and wood products, each down 0.7%.

Areas that continue to do well include information processing equipment output, up 0.3%, and electrical equipment output, up 1.5%. Expected future payoffs from generative AI are behind the gains in info equipment while electrical equipment will benefit from the infrastructure buildout for charging stations in travel corridors and communities across the US.

Utility output spiked 6% due to colder temperatures in January. Mining output declined by 2.3%.