US Industrial Production declined -0.6% in January, unexpectedly sinking when analysts were predicting a 0.3% increase. December production was revised down from 0.3% to 0.1%.
Key Takeaways
- Industrial production in the US was much weaker than predicted in January, and weaker than initially reported in December.
- Production is still 3.8% higher than this time last year.
- This marks the first drop in 8 months.
Production has been slumping around the world amid rising concerns of an economic slowdown as well as the trade war between the US and China impacting sector activity. Analysts had predicted that the US would continue to stay in positive territory even as production slumps in other countries, but they were proven wrong with the first dip in 8 months.
Capacity utilization dropped -0.6% to the lowest level since July at 78.2% in January.
All categories saw decline except for mining and utility production which saw some growth with mining output rising 0.1% and utilities rising 0.4%.
Manufacturing dropped by 0.9%, largely due to reduced production of motor-vehicle assemblies which took an -8.8% dive. The Volkswagen emissions scandal has led to stricter vehicular regulations which have severely impacted the production of motor vehicles worldwide. Excluding autos, factory output decreased by 0.2%.
Worldwide Decline
Industrial production decreased in Japan in December by 1.9% and by 9.8% in Turkey during the same month, with decline seen in other regions as well. The recent data for US industrial production may prove to be the beginning of a more long-term cool-down in the sector, with a strong dollar and an ongoing trade war hindering production.
US Jan Industrial Production -0.6%; Consensus +0.1%
US Dec Industrial Production Revised To +0.1% From +0.3%
US Dec Capacity Use Revised To 78.8% From 78.7%
-> another miss after retail sales.
It's probably a glitch, right?— alex (@flyalex666) February 15, 2019
Market Reaction
Gold has held strong gains of 0.58% following today’s mixed financial data releases, last trading at $1,314.52/oz with a high of $1,319.55/oz and a low of $1,310.66/oz. The precious metal continues to resist the $1,310.00/oz mark to test higher ranges.
With industrial production slumping worldwide, comparing reports on such activity in the US and the rest of the world may provide some insight into whether the growth differential will widen, bullish for the USD, or shrink, bullish for gold.
Gold Price Chart
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