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Economy in Brief

U.S. Industrial Production Took a Breather in December
by Kathleen Stephansen, CBE  January 14, 2022

• Industrial production is 0.6% higher than its pre-pandemic level.

• Durable and nondurable goods output posted small declines in December.

• Capacity utilization was little changed.

Industrial production declined 0.1% (+3.7% y/y) in December, following a rise of 0.7% (5.0% y/y) in November, revised from 0.5%. A 0.3% rise had been expected in the Action Economics Forecast Survey. Losses in manufacturing and utilities output were mostly offset by a gain of mining output. For the fourth quarter as a whole, total industrial production rose at an annual rate of 4.0%, up from a rise of 3.5% in the third quarter. Total industrial production in December was 3.7% higher than it was at the end of 2020 and 0.6% above its pre-pandemic (February 2020) reading.

Manufacturing output declined 0.3% (+3.5% y/y) last month, following a rise of 0.6% (4.5% y/y) in November, revised from 0.7%. Durable goods production dropped 0.4% (+3.8% y/y) in December, after a 0.6% rise in November. Motor vehicle production dropped 1.3% (-5.9% y/y), following a November rise of 1.7%. Excluding the motor vehicle sector, factory output declined 0.2% (+4.3% y/y), after a rise of 0.5% in November.

Elsewhere in the durable goods sector, high-tech product production rose 0.3% (5.5% y/y) in December after a rise of 0.6% in November. Production of electrical equipment, appliances & components was steady in December (+3.8% y/y) following a small decline of 0.1% in November. Machinery output rose 0.7% (8.0% y/y) more than reversing the 0.3% decline in November. Output of computers & electronic products rose 0.7% (7.5% y/y) following a 0.3% rise in November. Primary metals production dropped 0.2% (+9.4% y/y) after a small 0.1% decline in November. Fabricated metals output declined 1.2% (+4.2% y/y) following a rise of 0.9%.

In the nondurable goods sector, production declined 0.2% (+3.6% y/y) in December, after a 0.8% rise in November. Chemical production rose 0.7% (7.2% y/y) following a similar rise in November. Petroleum & coal product output declined 1.6% (+7.5% y/y) after a 1.1% advance in November. Food, beverage & tobacco output rose 0.2% (-0.4% y/y) in December, after a 0.6% rise the prior month, and textile production rose 0.1% (4.1% y/y) after a 1.7% rise in November. Apparel production fell 1.5% (+2.6% y/y) following a 1.2% decline in November.

Electric & gas utilities production declined 1.5% (-3.4% y/y) in December after a rise of 1.9% in November. Electric power output fell 0.4% (-1.9% y/y) following a 0.3% rise the prior month, while natural gas distribution dropped 7.9% (-12.3% y/y) after a 12.6% jump in November. Mining output rose 2.0% (11.0% y/y) in December following a 0.5% gain in November

Capacity utilization inched lower to 76.5% in December from 76.6% in November. A utilization rate of 77.0% had been expected. In manufacturing, the utilization rate edged lower to 77.0% from 77.2% last month, which was the highest level since December 2018.

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.

Industrial Production (SA, % Change) Dec Nov Oct Dec Y/Y 2021 2020 2019
Total Output -0.1 0.7 1.2 3.7 5.5 -7.2 -0.8
Manufacturing -0.3 0.6 1.4 3.5 6.2 -6.6 -2.0
   Durable Goods -0.4 0.6 1.4 3.8 8.3 -8.2 -2.1
     Motor Vehicles & Parts -1.3 1.7 10.8 -5.9 8.5 -15.7 -3.0
     Selected High Tech Equipment 0.3 0.6 -0.3 5.5 10.3 7.1 3.9
   Nondurable Goods -0.2 0.8 1.3 3.6 4.4 -4.4 -1.8
Utilities -1.5 1.9 -3.4 -3.4 2.0 -3.4 -0.8
Mining 2.0 0.5 4.3 11.0 2.9 -14.2 5.9
Capacity Utilization (%) 76.5 76.6 76.1 74.1 75.4 71.6 77.4
   Manufacturing 77.0 77.2 76.8 74.4 75.8 71.2 75.8
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