Boeing's shutdown of 737 MAX production played a key role in undercutting US industrial output in January

Washington (AFP) - The shutdown of Boeing production lines for the grounded 737 MAX continued to undercut US industrial output in January, which declined for the second consecutive month, the Federal Reserve reported Friday.

A boost in auto manufacturing partly offset the drop in aircraft output, but unusually mild weather meant utilities fell for the second straight month as well, according to the monthly data report.

Total industrial production fell 0.3 percent compared to December, following a 0.4 percent drop in the final month of the year, when Boeing announced it would have to shut down assembly of the MAX aircraft which was grounded in March 2019 following two deadly crashes.

Manufacturing of aircraft and parts plunged 9.1 percent compared to the prior month – the biggest drop since September 2008 when Boeing machinists went on strike.

That decline was partially offset by a 2.4 percent rise in motor vehicles and parts, so overall manufacturing output declined just 0.1 percent, the Fed said.

And without the dropoff in aircraft production, factory output would have risen 0.3 percent, rather than declining 0.1 percent.

Meanwhile, the absence of harsh winter weather lowered demand for heating, causing utilities to drop 4.0 percent last month after a 6.2 percent drop in December.

Mining output had another strong month, rising 1.2 percent.

Total industrial production remains 0.8 percent lower than a year earlier, while the manufacturing sector, which has been in recession for months amid President Donald Trump’s multi-front trade wars, is down by the same amount.

Meanwhile, total industrial capacity in use fell to 76.8 percent last month from 77.1 percent, well below the long-run average.

The mining sector is using 90.7 percent of installed capacity, far above the long-run average of 87.2 percent, the report said.