Manufacturing Sector Rebounds

The manufacturing sector appears to be making a comeback. Industrial production for November jumped 1.3 percent after edging up 0.1 percent in October (original estimate of down 0.1 percent due to weakness in utilities and mining). The consensus called for a 0.7 percent boost in November.

Manufacturing surged 1.1 percent, following a gain of 0.4 percent in Oct0ber. Expectations for the manufacturing component were for an increase of 0.6 percent. Mining slipped 0.1 percent in October, following a 1.0 percent drop the month before. Utilities rebounded 5.1 percent after a 0.7 percent decline in October.

Overall capacity utilization advanced to 80.1 percent in November from 79.3 percent in October.

November manufacturing was strong in the U.S. despite sluggishness in Europe and Asia. This report will be in the Fed hawks arguments for providing guidance for early tightening.

Recent History Of This Indicator:
Industrial production in October was stronger than indicated by the headline number. Industrial production for October slipped on comedowns in mining and utilities. Industrial production dipped 0.1 percent after jumping 0.8 percent in September. Importantly, manufacturing gained 0.2 percent after rebounding 0.2 percent in September. Mining declined 0.9 percent in October, following a 1.6 percent boost the month before. Utilities slipped 0.7 percent after a monthly 4.2 percent surge in September. Excluding motor vehicles, manufacturing rose 0.2 percent, following a gain of 0.3 percent in September. Overall capacity utilization posted at 78.9 percent in October versus 79.2 percent in September. Looking ahead, production worker hours in manufacturing from the employment report were up 0.5 percent for the month, suggesting a significant increase in the manufacturing component for November industrial production.