U.S. Industrial Production Posts another Decline in November
by:Sandy Batten
|in:Economy in Brief
Summary
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Significant declines in manufacturing and mining production.
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Utilities output rebounded.
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Capacity utilization slipped for second consecutive month.
Industrial production unexpectedly fell 0.2% m/m (+2.5% y/y) in November following an unrevised 0.1% monthly decline in October. There was, however, a meaningful upward revision to September (+0.4% m/m versus +0.1% previously). The consensus forecast had looked for a 0.1% m/m increase in November. This was the third monthly decline in the past four months, pointing to an industrial sector stressed by a slowing global economy and an aggressive tightening of U.S. monetary policy.
Manufacturing output slumped 0.6% m/m (+1.2% y/y) after an upwardly revised 0.3% m/m gain in October (previously 0.1% m/m). This was the first monthly decline in manufacturing output in the past five months. Mining output declined 0.7% m/m (+6.3% y/y), its third monthly decline in the past four months and the same monthly decrease as in October. By contrast, utilities production rebounded 3.6% m/m (4.6% y/y) in November, its first increase in four months, following a 1.3% monthly decline in October (revised from -1.5% m/m).
Reflecting the decline in output, the rate of capacity utilization fell to 79.7% in November from an unrevised 79.9% in October. This was the lowest reading since February. The rate of capacity utilization in manufacturing declined to 78.9%, its lowest reading since June, from an unrevised at 79.5% in October. Its expansion peak was 80.0% in April.
By industry groups, the decline in manufacturing output reflected a 0.6% m/m decrease (+2.7% y/y) in durable goods production and also a 0.6% m/m fall (unchanged y/y) in the production of nondurable goods. The monthly decline in durable goods production was led by a 2.8% m/m drop in motor vehicle output, a 2.4% m/m decline in the production of electrical equipment and appliances, and a 2.0% monthly decrease in furniture production. By contrast, production of wood products rebounded 3.6% m/m and production of aerospace and miscellaneous transportation equipment increased 1.1% m/m. The decline in nondurables production was widely spread with printing output (up 1.6% m/m) the only major sector posting a monthly gain.
By market groups, the production of consumer goods fell 0.4% m/m in November after a 0.7% m/m increase in October (revised up from +0.1% m/m). Output of business equipment dropped 0.8% m/m following a 0.5% monthly gain in October (revised down from +0.8% m/m). Construction supplies fell 0.2% m/m in November on top of a 0.4% monthly decline in October. This was the third decline in the past four months/
In special classifications, energy output rose 0.6% m/m in November after a 1.1% m/m decline in October (revised down from -0.9% m/m). Output of selected high-tech industries increased 0.6% m/m in November, reversing the 0.6% m/m decline in October. Manufacturing output excluding selected high-tech industries declined 0.6% m/m following an upwardly revised 0.3% monthly gain in October (previously 0.2% m/m).
Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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