January 2013 Industrial Production, Capacity Utilization and Capacity

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Industrial production edged down 0.1 percent in January after having risen 0.4 percent in December. In January, manufacturing output decreased 0.4 percent following upwardly revised gains of 1.1 percent in December and 1.7 percent in November. For 4Q2012 as a whole, manufacturing production is now estimated to have advanced 1.9 percent at an annual rate; previously, the increase was reported to have been 0.2 percent. In January, the output of utilities rose 3.5 percent, as demand for heating was boosted by temperatures that fell closer to their seasonal norms. At 98.6 percent of its 2007 average, total industrial production in January was 2.1 percent above its level of a year earlier.

Industrial production of Wood Products decreased by 1.3 percent, and Paper fell by 0.4 percent relative to December.

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The capacity utilization rate for total industry decreased in January to 79.1 percent, a rate 1.1 percentage points below its long-run (1972--2012) average. Capacity utilization fell by 1.1 percent for Wood Products while Paper decreased by comparatively modest 0.4 percent.

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Capacity at the all-industries and manufacturing levels moved higher (0.2 percent). By contrast, Wood Products dropped by 0.2 percent while Paper remained unchanged.

The outlook for U.S. manufacturing remains clouded. Some analysts believe the United States can “decouple from the rest of the globe and act as an island of economic prosperity.” However, wrote Lance Roberts, “with 40 percent of corporate profits tied to international exposure it is unlikely that the United States can remain decoupled from the rest of the global community for long.”

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.