January brings a upswing in manufacturing output for the United States

In January, manufacturing output in the United States rebounded, according to the Federal Reserve. However, December’s production was revised down to show a larger decline due to higher borrowing costs that are hurting the manufacturing sector. Economists had forecasted factory production to increase by 0.8%, but it grew by 1.0%.

Year-on-year output increased by 0.3%, but the manufacturing sector has seen demand for goods usually bought on credit being undercut by higher interest rates. The Institute for Supply Management’s measure of national factory activity has contracted for three straight months.

The increase in manufacturing output was offset by a plunge in utilities production, leaving overall industrial production unchanged.

Capacity utilization for the manufacturing sector increased to 77.7% in January, while overall capacity use for the industrial sector slipped to 78.3%. These capacity utilization measures are often used as signals for how much room the economy has to grow before it becomes inflationary.