Bad weather causes big falloff in January factory production

Bad weather causes big falloff in January factory production
Workers assemble ovens at a new Electrolux factory in Memphis, Tenn. (Adrian Sainz / Associated Press)

WASHINGTON -- Severe weather put a big freeze on factory production last month, causing output to fall the most since the Great Recession ended, the Federal Reserve said Friday.

Manufacturing output fell 0.8% in January compared with the previous month, the first drop since July and the biggest falloff since May 2009.


The decline was "partly because of the severe weather that curtailed production in some regions of the country," the Fed said.

The drop in factory output caused overall industrial production to unexpectedly fall 0.3% in January. That also was the first decline since July and was the biggest since April 2013.

Economists had projected industrial production would increase 0.3%, the same as in December.

It was another indication of how Old Man Winter has hurt the economy.

Retail sales dropped in January because of the snow, ice and bitter cold across much of the nation, and a CNBC survey estimated the rough weather cost the economy nearly $50 billion and 76,000 jobs.
"January’s reductions in output were more than likely due to poor weather conditions, which closed some facilities and hampered shipments," said Chad Moutray, chief economist for the National Assn. of Manufacturers.

"To the extent that weather was a contributing factor, I would expect for manufacturing production to rebound in the coming months," he said.

The Fed also revised down manufacturing growth for the fourth quarter of last year. The sector expanded at an annual rate of 4.6% instead of an earlier estimate of 6.2%.

The bad weather took its toll outside the manufacturing sector as well.

Mining production took a hit in January, falling 0.9% because cold temperatures caused slowdowns at oil and gas facilities, the Fed said.

And output of automotive products was down 5.1%, contributing to an overall 0.5% drop in production of consumer goods.

It was the first time in six months that category declined.

But there was one plus to the bad weather: It helped utilities' output to rise 4.1% "as demand for heating was boosted by unseasonably cold temperatures," the Fed said.