That was only partially offset by the slight rebound in utilities, while the volatile mining sector edged slightly higher. Manufacturing fell 0.9 percent last month compared to December, although it is still 2.9 percent higher than January 2018, according to the Fed report.
That drove overall output down 0.6 percent - in both cases the biggest declines since May of last year. Economists had been expecting a 0.2 percent gain in production. "In one line: Horrible, with further decline in manufacturing to come," Ian Shepherdson of Pantheon Macroeconomics said in reaction to the report. "Manufacturing is under real pressure from the slowdown in China and the trade war and we expect output to drift down over the first half of the year, putting the sector into a mild recession."
The auto industry, which has struggled to adapt to changing technology and consumer tastes, competition and rising steel prices due to the steep tariffs Trump imposed last year, saw production of vehicles plunge 14.4 percent, while output of parts dropped 3.6 percent. Excluding motor vehicles and parts, manufacturing still declined 0.2 percent, the report said.
Adding to the signals of a slowing industrial sector, overall production in December was slower than originally reported, rising just 0.1 percent rather than 0.3 percent. But output in January was 3.8 percent better than a year earlier. Economist Mickey Levy of Berenberg Capital Markets blamed the decline on the polar vortex.