U.S. factories see drop in production in January

  • Article by: DEE DEPASS , Star Tribune
  • Updated: February 14, 2014 - 8:30 PM

January’s decline in output was due to cold weather, the Fed said.

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U.S. manufacturing fell last month for the first time in six months. In photo, Elias Pedraza assembled a concrete stair form at Doty & Sons Concrete Products Inc. in Sycamore, Il. on Thursday.

Photo: Daniel Acker, Bloomberg

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The Federal Reserve Board said Friday that frigid weather prompted manufacturing production in January to fall for the first time in six months.

Output fell 0.8 percent last month compared with a 3 percent increase for the second half of 2013. Industries wrestling with declines included factories making cars, wood products, electrical equipment, appliances, textiles, printed and mined goods and food and beverages.

The Fed’s finding follows this month’s report by U.S. supply managers that found factories were still growing but that the pace of growth had slowed.

But Friday’s report proved more pessimistic, said Chad Moutray, chief economist of the National Association of Manufacturing. “Overall industrial production [was] well below the consensus expectation of a 0.3 percent increase,” he said. “This is particularly disappointing given the strong increases in demand and output that we saw at year’s end.”

While January’s declines are significant, they are also expected to be temporary as weather improves, Moutray and other economists said.

Sectors that beat the trend by posting growth for the month included computer and electronic products, nonmetal mining products, machinery and apparel.

Still, foul weather continued to cause trouble for factories. University of Maryland economist Peter Morici issued a report Friday noting that the big “freeze and crippling storms gripping the eastern United States and Upper Midwest are having significant impacts on normal life and commerce. ... Initially, lost economic activity and damages will range between $20 billion and $40 billion.”

While Minnesota had the coldest January in roughly 30 years, Creighton University’s business conditions report last week found that production continued to grow, but at a slower pace. Industries here that did well included medical equipment, computers, home-related products and other long-lasting goods.

Minnesota companies that recently reported earnings, such as Valspar, Select Comfort, 3M and Polaris Industries, all noted a jump in sales for the last quarter and forecast flat or improved sales for 2014.

The Creighton report noted that durable or long-lasting product makers had solid results in January. But makers of quickly consumed goods, such as processed food, didn’t perform as well.

The Fed report proved to be somewhat troubling because it highlighted weaknesses for both durable and nondurable goods. Both sectors saw production fall 0.8 percent in January.

Dee DePass • 612 673-7725

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