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Economy in Brief

U.S. Industrial Production Surges; Utility Output Up with Weather, But Manufacturing Also Gains
by Carol Stone   January 14, 2011

U.S. industrial production rose 0.8% in December, following 0.3% in November, which was revised from 0.4%. September and October were both revised upward modestly. The December result compares to a consensus forecast of 0.5%. Year-on-year growth is up to 5.9%, and the year 2010 averaged 5.7% above 2009, which in turn had plunged 9.3%. The rebound traces out the strong "V" shape so clear in the first graph.

Also evident in the first graph is the erratic contribution of utility output. The oversized jump in total output in December indeed came from a weather-related 4.2% month-on-month surge in utilities. Apart from this sector, manufacturing production and mining production were each up 0.4%, and manufacturing in particular extended its trend which has been averaging 0.3%-0.4% per month.

Consumer goods output rose 1.1% in December. This too was pushed by consumers' use of energy goods and services. Otherwise, consumer durable goods actually fell 0.5% and nonenergy nondurable goods edged up 0.1%. Among durable goods, the auto sector continues to struggle, with December output down 0.4% following November's huge 5.7% drop. Household durables also declined, by 1.1%, largely reversing a promising two-month advance. Computers and other technology goods, however, gained 0.9%, a pick-up from 0.6% and 0.7% in October and November, respectively. In the business equipment sector, output was up 0.6%; the impact of such a good gain is muted, though, by a moderation in November from the strong 0.9% reported initially to 0.4% in this report. Construction supplies sagged anew, with an 0.8% drop in December that followed increases that averaged 1.0% in each of the two prior months. Growth prospects in that sector remain tenuous.

Capacity utilization overall improved to 76.0%, the highest level since August 2008 and an increase of 0.6 percentage points over November. This, of course, is partly due to the jump in utilities. In manufacturing alone, utilization ran at 73.2%, up from 72.9% in November.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database; that database contains index data at more decimal precision and also includes extensive lists of relative importance figures for several breakdowns of production by industry and market group.

Industrial Production (SA, % Change) Dec Nov Oct Year Ago 2010 2009 2008
Total Output 0.8 0.3 -0.1 5.9 5.7 -9.3 -3.3
 Manufacturing 0.4 0.2 0.4 5.9 6.1 -11.1 -4.5
   Consumer Goods 1.1 -0.5 -0.1 3.1 4.6 -5.8 -4.2
   Business Equipment 0.6 0.4 1.4 11.8 7.9 -12.2 -1.5
   Construction Supplies -0.7 1.6 0.4 8.7 4.0 -16.7 -9.5
 Materials 0.9 0.5 -0.3 7.1 7.0 -9.7 -2.7
 Utilities 4.2 1.5 -4.3 2.0 3.2 -2.6 -0.1
Capacity Utilization (%) 76.0 75.4 75.2 71.6 74.3 70.0 77.9
 Manufacturing 73.2 72.9 72.8 69.1 71.7 67.2 75.0
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