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Economy in Brief

Industrial Output Up Slightly
by Tom Moeller December 15, 2006

Total U.S. industrial production ticked 0.2% higher last month but revisions generally had the effect of lowering the gains in output. Consensus expectations had been for a 0.1% November rise.

Revisions to the index of industrial production (IP) and the related measures of capacity & capacity utilization reflect the 2004 and 2005 Annual Surveys of Manufactures and selected editions of the 2004 and 2005 Current Industrial Reports.

Factory sector output rose 0.3% but a 0.6% decline during October was double the initial estimate. During the last three months factory sector output is down 0.3% from its August peak.

With a 1.7% (-1.9% y/y) increase, production of durable consumer goods recovered about all of its revised 1.9% October decline as output of automotive products recovered 3.6% (-3.6% y/y). Output of appliances & furniture, however, fell 0.5% (-4.9% y/y) and was off 6.6% from its peak in September 2005. Production of computers, video & audio equipment remained firm and rose 2.3% (13.0% y/y).

Nondurable consumer goods output slipped 0.1% (2.2% y/y) for the second month in the last three. The gain was softened only by a 1.1% (2.3% y/y) increase in foods & tobacco. Clothing output fell 0.6% (+0.5% y/y), chemical production fell 0.6% (+3.2% y/y) and production of paper products fell 1.4% (+2.2% y/y).

Business equipment production jumped 1.2% but October's increase was lessened to 0.2% from 0.7% reported initially. Output of information processing & equipment rose 1.0% but the 9.9% y/y gain is down from the growth posted earlier this year and those earlier growth rates were revised down. Factory output overall less the hi-tech industries increased 0.1% (2.1% y/y) after two months of sharp decline. Output of transit equipment recovered 2.9% (15.9% y/y) due to a 7.1% (-0.2% y/y) surge in business vehicles.

Overall capacity utilization increased was unchanged from a downwardly revised 81.8% in October. Factory sector utilization, however, increased to 80.2% from a downwardly revised 80.0% in October. Factory sector capacity again rose a firm 0.2% and the 2.7% y/y gain was revised up slightly.

The Chinese Economy: Progress and Challenges is today's speech by Federal Reserve Board Chairman Ben S. Bernanke and it is available here.

Production & Capacity November October Y/Y 2005 2004 2003
Industrial Production 0.2% 0.0% 3.8% 3.2% 4.1% 0.6%
 Manufacturing (NAICS) 0.3% -0.6% 3.7% 4.0% 3.0% 1.3%
  Consumer Goods 0.4% -0.4% 1.2% 2.8% 1.4% 1.4%
  Business Equipment 1.2% 0.2% 9.6% 7.9% 4.3% 0.2%
Capacity Utilization 81.8% 81.8% 80.7% (11/05) 80.2% 78.1% 76.1%
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