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U.S. Industrial Production Unexpectedly Edges Lower In January

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Partly reflecting a decrease in mining output, the Federal Reserve released a report on Thursday unexpectedly showing a slight drop in U.S. industrial production in the month of January.

The Fed said industrial production dipped by 0.1 percent after climbing by a downwardly revised 0.4 percent in December.

Economists had expected production to rise by 0.2 percent compared to the 0.9 percent increase originally reported for the previous month.

Andrew Hunter, U.S. Economist at Capital Economics, said the drop in production was not a huge surprise following the rapid growth at the end of last year.

"Along with the weaker retail sales data released yesterday, however, it provides further evidence that economic growth may (yet again) disappoint in the first quarter," Hunter added.

The unexpected decrease in production was partly due to a steep drop in mining output, which slumped by 1.0 percent in January after falling by 0.4 percent in December. Manufacturing output came in unchanged for the second consecutive month.

On the other hand, the Fed said utilities output rose by 0.6 percent in January after spiking by 4.6 percent in December.

The continued increase in utilities output was due to the unseasonably cold temperatures in the Northeast at the start of the month.

The report also said capacity utilization in the industrial sector dropped to 77.5 percent in January from 77.7 percent in December. Capacity utilization had been expected to rise to 78.0 percent.

Capacity utilization in the utilities sector rose to 81.1 percent, while capacity utilization in the manufacturing sector was unchanged at 76.2 percent and capacity utilization in the mining sector fell to 84.2 percent.

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