US manufacturing output continues recovery

Recent gains bolstered by consumer spending and recovery in oil sector

US factory output increased for the fourth time in five months amid gains in machinery and chemicals, extending a gradual recovery in manufacturing.

Production at factories, which make up about 80 per cent of all output, increased 0.2 per cent in January from the previous month, a Federal Reserve report showed Wednesday.

That matched the median forecast in a Bloomberg survey. Total industrial output, which includes mining and utilities, fell 0.3 percent as warm weather reduced demand for heating.

Healthy consumer spending and a recovery in the oil sector have supported recent gains in manufacturing, with a key gauge of industry rising last month to the highest since November 2014.


Overseas demand

At the same time, modest overseas demand, a strong US dollar and soft investment in equipment from domestic firms have made for slow progress.

Estimates in the Bloomberg survey for manufacturing output, which accounts for about 12 per cent of the economy, ranged from a decline of 0.1 per cent to an increase of 0.6 per cent. The previous month’s reading of a 0.2 per cent gain was unrevised.

For total industrial production, the Bloomberg survey showed estimates ranging from a 0.6 per cent drop to a rise of 0.4 per cent, with a median projection for no change.

Capacity utilisation, which measures the amount of a plant that is in use, declined to 75.3 per cent in January from a revised 75.6 per cent the previous month.

Utility Output

Utility output dropped 5.7 per cent after December's 5.1 per cent gain. Last month was the 18th-warmest January in the last 123 years, according to the National Oceanic and Atmospheric Administration.

Mining production, including oil drilling, expanded 2.8 per cent in January after a 1.4 per cent drop.

Drilling of oil and gas wells jumped 8.5 per cent.

US rig counts increased to 741 in the week ended February 10th, the highest in more than a year, helped by increasing energy prices, Baker Hughes data shows.

Consumer durable-goods output fell 0.9 per cent last month on a 2.8 per cent drop in automotive production.

Business equipment production ticked up 0.1 per cent following a 0.8 per cent increase.

- Bloomberg