US factory output hit by 'severe weather'

US factory Car production was hit hard by the bad weather

US factory output fell in January due to the "severe weather" that hit some parts of the country.

Output fell by 0.8%, the biggest drop in four-and-a-half years, the Federal Reserve said. Compared with a year earlier, output was up by 1.3%.

Car manufacturing was hit particularly hard, as many plants lost at least a day's production due to bad weather.

Analysts had been expecting a sixth straight monthly rise in overall factory output.

Output of electrical equipment, furniture and fabricated metals was also down on the previous month. The "inclement weather in January contributed to some of these decreases," the Fed said.

Total industrial production, which includes mining and utilities, fell by 0.3%. Recent data has shown that retail sales in the US have fallen for the past two months, while jobs growth has also slowed markedly.

But analysts said that although the fall in production was a surprise, it said little about the underlying state of the US economy.

"The big question is whether the US economy is slowing significantly or whether it is merely going through a soft patch caused by extreme weather," said Chris Williamson, chief economist at Markit. "The evidence points to the latter."

He said the figures were unlikely to change the Fed's policy of winding down stimulus measures, known as tapering.

"The Fed will most likely disregard the figures and continue to taper, although any further weakness on the data flow in coming months could prompt a rethink," he said.

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