According to the latest manufacturing report by the Federal Reserve, U.S. factories saw a small increase in production this past January while motor vehicle output fell for a second straight month amid the ongoing global shortage of semiconductors.
The report, released on Wednesday, showed that manufacturing output gained 0.2% last month after a slight 0.1% dip in December. This is just shy of the 0.3% rebound many economists had predicted. Compared to January 2021, output rose by 2.5%.
Meanwhile, production at auto plants continued to decline, as output fell by 0.9% last month after slipping 0.4% in December. If one excludes motor vehicles, manufacturing increased 0.3% in January.
Last month’s gain in manufacturing output combined with a record 9.9% jump in utilities to boost industrial production 1.4%. That followed a 0.1% fall in December.
Demand for utilities was boosted by freezing temperatures in many parts of the country in January. Mining production increased 1.0%, with oil and gas well drilling advancing 6.2%.
The main concerns impacting the manufacturing sector largely remain the same: the ongoing lack of supplies and labor. Semiconductor shortages continue to bottleneck many industries, especially the automotive sector, as many manufacturers have started to reintroduce production delays or stoppages in order to keep a serviceable stockpile of chips.
At the same time, Covid-19 still prevents many suppliers and manufacturers from fielding the manpower they need to fully ramp production back up. While the worst of the recent Omicron variant seems to have passed, there’s still the ever-looming concern that a new variant will arise and result once again in extreme social distancing measures.