Feb 18, 2020 - Economy & Business

U.S. industrial production stalls out again

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Data: Federal Reserve; Chart: Axios Visuals

U.S. industrial production fell by 0.3% in January, month over month, and the previous month was revised down to -0.4%, according to the Federal Reserve.

By the numbers: The reading brings the annualized rate to -0.8% and is the fifth reading in a row below zero.

Why it matters: "The drop in factory output is particularly concerning as over the past 50 years, we've only seen one instance where IP slowed this much YoY without a commensurate recession," BMO Capital Markets rate strategist Jon Hill said in a Friday note to clients.

The big picture: Some of the weakness can be blamed on Boeing, which has all but shut down as its 737 MAX jet has been grounded worldwide after two plane crashes killed hundreds in 2018 and 2019.

  • The Fed's report showed industrial output was led lower by a 7.4% fall in aerospace production and a 0.1% decline in overall manufacturing output.
  • Utility production dropped 4%.
  • The numbers were also weakened by warmer weather, as electric and natural gas utilities fell 3.2% and 7.7%, respectively.

Go deeper: U.S. manufacturing activity hits worst level since 2009

Go deeper

Philly Fed index boomed in January

Data: Federal Reserve Bank of Philadelphia, projection from Wall Street Journal; Chart: Axios Visuals

The Philadelphia Fed's manufacturing business outlook rose to near its highest level on record and notched its biggest reading above economists' expectations in history.

The big picture: Analysts at BMO Capital Markets note that the monthly reading is among the highest in history (in the 99th percentile) going back 30 years and marked the largest two-month jump since 1995.

Coronavirus forces record-low business conditions

Data: New York Federal Reserve; Chart: Axios Visuals

The first piece of concrete data on the U.S. economy since the COVID-19 outbreak started to significantly impact U.S. firms was released Monday and the results were not good.

Driving the news: The New York Fed's Empire State business conditions index fell by a record 34.4 points this month to its lowest level since the financial crisis in 2009, based on surveys conducted March 2–10. Economists had expected a reading in the single digits.

Boeing's continued woes will add to coronavirus damage

Illustration: Aïda Amer/Axios

Somewhat forgotten in the evaluation of the current state of the U.S. economy is the ongoing debacle at Boeing, a flagship American company whose production shutdown led to the New York Fed estimating it would shave 20% off of 2020's GDP growth — and this was before the coronavirus outbreak. Things could be getting worse for Boeing.

Driving the news: A report is due this week from airline safety investigators to coincide with the one-year anniversary of the Ethiopian Airlines crash that was the second in six months for Boeing's 737 MAX jets.