U.S. industrial output unexpectedly plunged 0.5% in January as a big drop in manufacturing, particularly vehicles and parts, more than offset a rebound in utilities, a government report said on Thursday.
"Output in the manufacturing sector declined 0.7% in January; about one-half of the decrease was a result of a drop of 6.0% in motor vehicles and parts," the Federal Reserve said in its monthly report.
This was the biggest drop in overall output in more than five quarters, or since a 1.6% decline in September 2005.
The drop in production pushed capacity use of factories, mines and utilities down to 81.2%, its lowest level in nearly a year.
Analysts polled by Reuters had predicted industrial output would be flat in January as manufacturers worked down inventories. They also predicted a smaller decline in capacity
use to 81.7% from an unrevised 81.8% the prior month.
Utility output grew 2.3% in January as temperatures returned to more normal levels, the Fed noted, after a 2.7% drop in December.
Mining output fell 1.2% after a 1.4% increase the prior month.
Along with the big decline in vehicle and parts output, machinery production also plunged 4.1% in January.
Compared to a year ago, overall industrial output was up just 2.6%. Notably, utility output was up 10.1% from the same time last year.