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US: Peak in industrial capacity utilization

by hukuknews

When we look at the industrial production data that will give an idea about economic trends and GDP growth in the first quarter, we see signs of a sharp recovery from the Omicron wave of economic activity. Total industrial production increased by 1.4% in January. Total industrial production in January was 4.1% above the previous year’s level and 2.1% above the pre-pandemic (February 2020) reading. Capacity utilization for the industrial sector increased by 1 percentage point to 77.6% in January, 1.9 percentage points below the long-term (1972-2021) average.

 

This is a positive data in terms of showing the periodic increase trend in the industry, compared to the signs that the US economy was affected by the increase in COVID-19 cases due to the Omicron variant in January. US companies are increasing their production capacity. This is still a good sign in the risk of production slowdown due to supply problem, plus the related labor need and demand will increase. It can help create the prevailing conditions for a tight market. Bypassing the effects of the Omicron variant will also limit the risks of outbreak sources. Going forward, delays from Omicron, chip-related problems in auto manufacturing, and supply chain inconvenience are factors at risk of slowdown.

 

The momentum of economic activity supports the Fed’s tightening policy in any case.

 

Kaynak Tera Yatırım
Hibya Haber Ajansı

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