Industrial output up 0.9% in January

Production rise is 4th in row, but remains below levels before pandemic struck

WASHINGTON — American industry expanded for the fourth-consecutive month in January but has yet to recover fully to the level of activity that preceded the pandemic.

U.S. industrial production, which includes output factories, mines and utilities, rose 0.9% last month, the Federal Reserve reported Wednesday. That followed increases of 1.3% in December, 0.9% in November and 1.1% in October.

While the January activity was greater than most economists had projected, it was 1.8% below production in January 2020, reflecting lingering economic damage from the coronavirus pandemic.

Manufacturing rose 1% even though production of autos and auto parts (down 0.7%) was constrained by a shortage of semiconductors used in vehicles.

The gain in factory output was broad-based, with increases in production of consumer goods, business equipment, construction materials and nondurable products.

While supply chain disruptions and labor shortages continue to present challenges, these pandemic-related setbacks are expected to dissipate as vaccinations pick up.

Manufacturing capacity utilization picked up to 74.6% from 73.9%, while total capacity utilization, including factories, mines and utilities, increased to 75.6% from 74.9%.

The overall plant-use rate is just below the prepandemic level of 76.9%. Unused capacity weighs on corporate profits.

Mining jumped 2.3% on a burst of oil and gas drilling, which has risen for five-straight months 11.3% in January alone. Still, drilling is down 50.5% over the past year.

An unusually warm January caused utility output to fall 1.2%; natural gas production slid 5.7%. But the utility drop “looks set to more than reverse in February” after blasts of snow and frigid conditions across much of the country, Andrew Hunter, senior economist at Capital Economics, wrote in a research note.

Nearly 3 million customers in Texas remained without power Wednesday after historic snowfall and singledigit temperatures created a surge in demand for electricity to warm up homes unaccustomed to such extreme lows. The cold snap buckled the state’s power grid and caused widespread blackouts.

In a separate report Wednesday, retail sales surged in January by the most in seven months, beating all estimates and suggesting fresh stimulus checks helped spur a rebound in household demand after a weak fourth quarter.