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Tuesday, July 16, 2024
HomeNewsEconomyIndustrial Production Expectedly Fell, Weighed Down By Utilities in December

Industrial Production Expectedly Fell, Weighed Down By Utilities in December

Industry production 4.0 and technology concept, depicting factory production on a conveyor belt with factory operational workers in uniform. (Photo: AdobeStock)

The Federal Reserve said industrial production fell 0.3% in December, as a decline of 5.6% in utilities outweighed gains of 0.2% and 1.3% in manufacturing and mining, respectively.

Forecasts for industrial production ranged from a low of 0.5% to a high 1.1%. The consensus was 0.9%. Forecasts for manufacturing output ranged from a low of -1.0% to a high 0.2%. The consensus was 0.2%.

The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November. For the fourth quarter as a whole, total industrial production moved down at an annual rate of 0.5 percent.

At 109.4% of its 2012 average, total industrial production was 1.0% lower in December than it was a year earlier. Capacity utilization for the industrial sector fell 0.4 percentage point in December to 77.0%, a rate that is 2.8 percentage points below its long-run (1972–2018) average.

Forecasts for the capacity utilization rate ranged from a low of 76.9% to a high 77.4%. The consensus was 77.1%.

Regional manufacturing surveys in the Northeast and Mid-Atlantic signal factory activity picked up in January.

While manufacturing output rose 0.2% in December, it decreased by an annual rate of 1.0% in the fourth quarter of 2019. Worth noting, the gain posted despite a 4.6% decline for motor vehicles and parts; assemblies of light motor vehicles falling from 11.2 million units (annual rate) to 10.3 million units.

Capacity utilization for manufacturing edged up 0.1 percentage point to 75.2%, about 3.1 percentage points below its long-run average.

The utilization rate for mining increased to 89.6%, remaining above its long-run average of 87.1%. The operating rate for utilities fell to 73.5%, a rate that is about 12 percentage points below its long-run average.

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PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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