Industrial Production Just Beats Expectations

Another surge in mining and a bounce in utilities offset another disappointment for manufacturing to drive industrial production up 0.9 percent in December to just top Econoday's high estimate. Mining production, up a year-on-year 11.5 percent, has been rising in large monthly clips including December at 1.6 percent. Utility production often swings month-to-month based on weather and rose 5.6 percent in December in contrast to the yearly change which is very modest at plus 1.8 percent.

Manufacturing volumes have also been very modest, at a monthly gain of only 0.1 percent and a year-on-year increase at a very modest 2.4 percent. But December's details are surprisingly positive with vehicle production a highlight, up 2.0 percent in the month, and also selected hi-tech at a solid plus 0.4 percent. Non-durables declined 0.1 percent in the month while production of construction supplies, despite strength in other readings on the sector, was unchanged.

The lack of strength in manufacturing volumes in this report, which is produced by the Federal Reserve, has been a consistent surprise and stands out against factory orders data where year-on-year shipments and new orders growth, measured in dollar terms and produced by the Commerce Department, is in the mid-to-high single digits and, most importantly, is showing acceleration. Another report released by the Federal Reserve where flat is the direction and modest-to-moderate the theme is the Beige Book which will be posted this afternoon.

Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.

Recent History Of This Indicator:
Econoday's consensus gain for December industrial production is 0.4 percent which would follow November's 0.2 percent rise. Mining rose in December but utilities dipped and it was in fact a 0.2 percent gain for the manufacturing component that set the modest pace of November's report. Vehicle and hi-tech production eased in November while the production of consumer goods fell noticeably. Based on factory hours in December's employment report, forecasters see the manufacturing component rising a moderate 0.3 percent to extend what has been a stubbornly soft trend for this series. Total capacity utilization in December is seen rising 2 tenths to 77.3 percent.