U.S. Industrial Production Unexpectedly Increases in December
Summary
- IP +0.1% m/m (+1.0% y/y) in Dec.; downward revision for Nov.
- Mfg. IP inches up 0.1% m/m, w/ durable goods down 0.4% and nondurable goods up 0.6%; motor vehicles production rises 1.6%, the second successive m/m gain.
- Mining activity rebounds vs. two consecutive m/m drops, but utilities output falls for the fourth straight month.
- Performance in key categories in market groups is mixed.
- Capacity utilization holds steady at 78.6%.
Total industrial production ticked up 0.1% m/m (1.0% y/y) in December after being virtually unchanged in November (+0.2% initially) and a 0.8% decline in October (-0.9% previously), according to the Federal Reserve Board. The December IP index at 102.5, the same as in October, was 7.4% above a low of 95.4 in February 2021. A 0.1% m/m easing had been expected in the Action Economics Forecast Survey. IP fell 0.8% q/q in Q4 2023 after a 0.5% q/q rise in Q3 2023, falling at a 3.1% annualized rate following a 1.8% Q3 annualized rate of increase. IP rose 0.2% in 2023, 3.4% in 2022 and 4.4% in 2021.
By industry groups, manufacturing production edged up 0.1% (1.2% y/y) in December, the fifth m/m increase in six months, after a downwardly revised 0.2% rise in November (+0.3% initially). Durable goods production fell 0.4% (+1.0% y/y) following a 1.0% November rebound, reflecting output drops of 2.4% (0.0% y/y) in electrical equipment, appliances & components, 1.9% (+0.2% y/y) in wood products, 1.2% (-3.8% y/y) in machinery, 1.2% (-2.3% y/y) in fabricated metal products, 1.0% (+1.6% y/y) in miscellaneous durables goods, 0.5% (-4.7% y/y) in nonmetallic mineral products, and 0.1% (+4.2% y/y) in primary metals. The following durable goods categories, however, rose m/m in December, reflecting output rises of 1.6% (4.8% y/y) in motor vehicles & parts, 1.3% (-6.6% y/y) in furniture & related products, and 0.1% (7.9% y/y) in computer & electronic products. Meanwhile, production for aerospace & miscellaneous transportation equipment held steady (5.4% y/y) in December following two consecutive m/m increases.
Nondurable goods production rose 0.6% (1.7% y/y) in December, the first m/m rise since September, after a 0.5% decline in November, reflecting output increases of 2.2% (8.0% y/y) in petroleum & coal products, 0.8% (-1.1% y/y) in food, beverages & tobacco, 0.7% (-1.1% y/y) in plastics & rubber products, 0.3% (4.8% y/y) in chemicals, and 0.3% (-12.0% y/y) in apparel & leather goods. In contrast, the following nondurable goods categories fell m/m in December, including output drops of 1.3% (+0.4% y/y) in paper and 0.6% (-7.9% y/y) in printing & related support activities. Meanwhile, production for textiles & product mills was unchanged (-3.5% y/y) in December following two successive m/m declines.
Mining activity grew 0.9% (4.3% y/y) in December, the first m/m gain since September, following a downwardly revised 1.0% decline in November (+0.3% initially). In contrast, utilities output slid 1.0% (-4.9% y/y), the fourth consecutive m/m slide, worsening a 0.7% November decrease (-0.4% initially).
By market groups, consumer goods output rose 0.2% (-1.0% y/y) in December after a 0.1% rebound in November, reflecting a 0.9% gain (1.6% y/y) in durable consumer goods and no change (-1.7% y/y) in nondurable consumer goods. Materials production moved up 0.1% (2.7% y/y) in December following two successive m/m drops. To the downside, business equipment output fell 0.2% (-0.1% y/y) in December, the third m/m fall in four months, after a 1.0% increase in November. Construction supplies production dipped 0.1% (-1.0% y/y), the seventh m/m decline in eight months, following a 0.6% November drop.
In special classifications, factory output of selected high-tech industries advanced 0.9% (18.1% y/y) in December, the 11th straight m/m gain, on top of a 1.7% rise in November. Manufacturing production excluding selected high-tech industries was virtually unchanged (0.8% y/y) following a 0.2% November rebound, while manufacturing production excluding both selected high-tech and motor vehicles & parts slipped 0.1% (+0.5% y/y), the third consecutive m/m decline.
Capacity utilization was unchanged at an expected 78.6% in December (with the November rate revised down from 78.8% initially reported). The December reading was 1.1 percentage points below its long-run (1972–2022) average. Manufacturing capacity utilization held steady at 77.1% (with the November rate revised down from 77.2% initially reported).
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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has ~20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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