The United States (U.S.) Federal Reserve reported industrial production in the U.S. for the month of January resulted in no change and was worse than analysts’ expectation of a 0.7% increase. Industrial production includes activity in manufacturing, mining as well as electric and gas utilities. Manufacturing had climbed 0.7% but was negated by mining and utility reductions during the month. A large proportion of increases in manufacturing came about as automobiles and parts saw increasing demand by 6.8%. Further production increases were seen in electrical equipment, machinery, electronic and computer products as well as furniture and related products. The power sector saw output decrease by 2.56% in January as there was a reduced need for heating due to unseasonably warm weather. Additionally, mining production lowered by 1.8%. Factory production In December was upwardly revised to 1.0% from the previous 0.4% figure. The results indicated December had seen an increase in both manufacturing and mining productions, exhibiting economic strength. Additionally, the January outcome proved 3.4% higher than the January a year earlier.
.png)
The industrial capacity utilization rate lowered to 78.5% for the month January, 1.9 percentage points less than its long standing (from 1972 through 2011) average. Yet, this minor reduction was due largely to the sharp upward revision to December’s production. Moreover, the utilization rate for December revised to 78.6% from the original 78.1% reported by the Fed. The industrial utilization rate measures how much factories are being utilized to produce goods. Increasing rates exhibit a stronger economy with increasing demand. Over the past year the utilization rate has increased 1.6 percentage points but is still less than levels seen in more desirable economic times.
The EURUSD dropped over 100 pips by the end of the U.S. session. The reluctance of the Federal Reserve to offer further QE and the uneasiness over Greece pushed EURUSD towards 1.3050. Risk sentiment will continue to be down until the Greece bailout situation is resolved.
Eugene Ross, Analyst
Admiral Markets
At any use of the analytical material taken from a site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», the reference to a company site is obligatory.
