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Economy in Brief

U.S. Industrial Production Strengthens with Cold Weather; Factory Output Edges Higher
by Tom Moeller  January 17, 2018

The Federal Reserve indicated that industrial production increased 0.9% (3.6% y/y) during December following a 0.1% dip in November, revised from +0.2%. A 0.4% rise had been expected in the Action Economics Forecast Survey. Last month's increase reflected a 5.6% jump in utility output which was boosted by cold temperatures. Factory sector production gained 0.1% (2.3% y/y) after a 0.3% rise. Mining output surged 1.6% (11.5% y/y) following a 0.1% uptick.

The rise in factory sector output reflected a 1.0% increase (1.5% y/y) in consumer goods production, bolstered by a 2.0% strengthening (0.4% y/y) in motor vehicle & parts output. Apparel production gained 0.4% (-8.7% y/y) and paper output rose 0.3% (-1.1% y/y). To the downside, electrical equipment & appliance output fell 0.7% (+3.1% y/y). Business equipment production improved 0.2% (4.2% y/y). Machinery production increased 0.5% (8.3% y/y) but computer & electronic component production eased 0.1% (+2.4% y/y). Chemical production fell 0.7% (+3.2% y/y) and petroleum & related product output was off 0.7% (+2.0% y/y).

Production of materials jumped 1.1% (5.2% y/y) as energy materials production surged 2.7% (8.0% y/y). Durable goods materials improved 0.1% (3.5% y/y) and nondurable goods materials also rose 0.1% (3.0% y/y).

In the special aggregate groupings, production in selected high-technology industries rose 0.4% (3.7% y/y). Nonenergy production excluding high-tech gained 0.2% (2.4% y/y). Factory sector production excluding both high-tech and autos was unchanged (2.5% y/y).

Capacity utilization increased to 77.9%, the highest level since February 2015. Factory sector capacity utilization held steady m/m at 76.4%. Electric & gas utility utilization surged to 80.4%.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) Dec Nov Oct Dec Y/Y 2017 2016 2015
Total Output 0.9 -0.1 1.8 3.6 2.0 -1.2 -0.7
Manufacturing 0.1 0.3 1.5 2.3 1.4 -0.0 0.1
    Consumer Goods 1.0 -0.7 1.3 1.5 0.5 0.6 2.3
    Business Equipment 0.2 0.1 1.2 4.2 2.6 -1.8 -0.9
    Construction Supplies 0.0 0.7 0.7 3.2 2.5 1.3 0.5
  Materials 1.1 0.1 2.6 5.2 2.7 -2.3 -1.4
Utilities 5.6 -3.1 4.1 1.8 -0.4 -0.3 -0.7
Mining 1.6 0.1 1.7 11.5 6.6 -9.1 -4.3
Capacity Utilization (%) 77.9 77.2 77.4 76.0 76.5 75.7 76.8
 Manufacturing 76.4 76.4 76.3 75.2 75.7 75.1 75.5
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