November Industrial Economy Report Shows Modest Gain

A rise for mining offsets a dip for utilities making a modest 0.2 percent gain for manufacturing the story for November's industrial economy. This report's manufacturing component has been the only uneven indicator on the factory sector all year which limits the surprise of November's results.

Forecasters weren't calling for much strength in the first place with Econoday's consensus at only 0.3 percent for manufacturing. Vehicle production, after a run of strength, understandably eased in November to only a 0.1 percent increase with selected hi-tech also slowing but to a still useful 0.3 percent gain. And production of business equipment was even more positive at 0.5 percent and with construction supplies at 0.6 percent. Weakness on the manufacturing side is once again in consumer goods where volumes fell 0.4 percent to underscore the nation's lack of competitiveness in this important category.

Outside of manufacturing, mining volumes rose 2.0 percent in November to extend its leading performance to year-on-year growth of 9.4 percent. Utility output fell 1.9 percent with this year-on-year rate at 2.3 percent. Turning back for a comparison with manufacturing, this year-on-year rate is a very modest 2.4 percent.

Overall industrial production rose 0.2 percent while capacity utilization rose 1 tenth to a 77.1 percent rate that, in contrast to the slew of anecdotal readings on the factory sector, points to plenty of spare capacity remaining. One notable positive in today's report is an upward revision to October's manufacturing production which now stands at a very outsized 1.4 percent, an isolated gain however that reflects hurricane effects.

Given the strength of October manufacturing and despite November's modest showing, most signals are pointing to an accelerating factory contribution to the fourth-quarter economy. Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.

Recent History Of This Indicator:
Though choppy through the hurricane season, industrial production snapped back with a 0.9 percent gain in October while the manufacturing component, after posting a solid September gain, surged 1.3 percent. Forecasters see easing in November with the consensus gain at 0.3 percent for both total production and for manufacturing production.