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Economy in Brief

U.S. Industrial Production Growth Moderates
by Tom Moeller  January 17, 2014

Industrial production turned in a 2.6% increase in 2013, the slowest gain of the economic recovery. During December the expansion continued as output gained 0.3% (3.7% y/y) following a little-revised November increase of 1.1%. Growth in factory production slowed to 2.3% last year, also the weakest rise of the economic recovery. During December, however, the 0.5% increase (2.6% y/y) was steady with the gains during the prior two months.

Consumer goods output picked up steam last year with a 2.3% increase and ended the year with 0.5% (3.7% y/y) and 1.2% increases. Automotive products output gained 8.6% in 2013 and posted a 1.8% (10.4% y/y) December increase. Output of appliances gained 4.1% in 2013 and 1.2% (8.3% y/y) in December. Working lower was output of computers, video & audio equipment. It fell 1.2% for the year but rose 1.2% (-2.1% y/y) in December. In the nondurable goods area, clothing output rose a modest 1.8% for the year and picked up to 1.1% (7.3% y/y) last month. To the downside was paper output where the 4.1% annual decline continued the down-trend of the last fourteen years. Chemical output also fell 1.0% last year, the fifth decline in output in the last six years.

In the capital goods sector, output rose 3.6% for the year after growth between 8.3% and 5.6% in the prior three years. Production here fell 0.6% (+1.8% y/y) last month after a 0.3% November fall. Factory sector activity excluding the high tech & auto industries advanced 0.2% (2.0% y/y) last month and 1.8% for all of last year, the slowest gain of the recovery.

The capacity utilization rate notched up to 79.2% last month from a downwardly revised 79.1%. For the year, the utilization rate improved to 78.2% but remained below the 80.5% level in 2007. In the factory sector the capacity utilization rate rose to 77.2%, the highest level since March 2008. Factories ran at a 76.3% rate for all of last year, up from 75.8% in 2012. Growth in total industry capacity was 1.8% versus 2.2% growth in 2012.

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 2013 2012 2011
Total Output 0.3 1.1 0.3 3.7 2.6 3.6 3.3
Manufacturing 0.5 0.5 0.6 2.6 2.3 3.9 3.4
  Consumer Goods 0.5 1.2 0.3 3.7 2.3 1.6 1.5
  Business Equipment -0.6 -0.3 0.3 1.8 3.6 8.3 5.6
  Construction Supplies 0.5 0.5 0.5 4.5 4.4 5.2 3.0
Materials 0.4 1.4 0.3 4.1 2.9 4.1 4.7
Utilities -1.4 3.0 1.0 7.6 1.8 -2.1 -0.2
Capacity Utilization (%) 79.2 79.1 78.4 77.8 78.2 77.6 76.5
 Manufacturing 77.2 76.9 76.6 75.8 76.3 75.8 74.0
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