US industrial production grew more slowly in January owing to a weaker manufacturing performance and falling utilities output. Total production grew by 3.4% year on year, the Federal Reserve said on February 15th, up from a 2.9% gain in December. Month on month, production was flat, after jumping by 1% previously. Manufacturing (which accounts for 75% of total production) rose by a monthly 0.7%, following a 1.5% increase in December, as robust car-production growth was offset by weaker machinery output. Utilities output slipped by 2.5%, however, with monthly mining production also down, by 1.8%.THE EIU VIEW
The latest figures support our view that industrial production will decelerate this year. Over the next few months the recovery from the disaster in Japan, which was a drag on output last year, will have a positive impact, although part of this may be offset by problems in global supply chains stemming from the recent flooding in Thailand. Although consumers have shown an increased appetite for spending in recent months, recession in Western Europe will continue to weigh on business and consumer confidence, as well as on exports, holding back industry growth. We expect industrial production to grow by 3% this year, slowing from 4.2% growth in 2011.



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