Photographer: Ty Wright/Bloomberg

U.S. Manufacturing Output Rose in December for Fourth Month

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U.S. factory production rose for a fourth straight month in December, capping the strongest quarter since 2010 and underscoring a resurgence in manufacturing that’s primed for further advances, Federal Reserve data showed Wednesday.

Highlights of Industrial Production (December)

  • Factory output rose 0.1% (est. 0.3% gain) after rising an upwardly revised 0.3%
  • Total industrial production, which also includes mines and utilities, increased 0.9% (est. 0.5% rise) after a revised 0.1% decrease
  • Capacity utilization, measuring the amount of a plant that is in use, rose to 77.9% (est. 77.4%) from 77.2%

Key Takeaways

The smaller-than-expected December gain in manufacturing output reflected a 0.1 percent drop in production of nondurable goods, including petroleum and chemicals. Output of durable goods rose a solid 0.3 percent.

Factory output increased at a 7 percent annualized rate in the fourth quarter, the strongest since the second quarter of 2010. Combined with national and regional surveys of purchasing managers, the figures indicate manufacturing was robust at the end of the year.

Stronger consumer spending, increased business investment and more shipments of merchandise to overseas customers are providing plenty of fuel for the nation’s producers. What’s more, the lowest business inventory-to-sales ratio in three years could translate into increased production in coming months.

Factory output climbed 1.3 percent in 2017, the strongest annual reading in five years.

The Fed’s monthly data are volatile and often get revised. Manufacturing, which makes up more than 75 percent of total industrial production, accounts for about 12 percent of the U.S. economy. It increased 2.4 percent in December from the same month a year earlier.

Other Details

  • Utility output jumped 5.6 percent, boosted by colder weather, after falling 3.1 percent the prior month
  • Mining production rose 1.6 percent; with oil and gas well drilling rising 0.9 percent
  • Production of motor vehicles increased 2 percent, the most in four months; excluding autos and parts, manufacturing output fell 0.1 percent
  • Production of consumer goods rose 1 percent, and output of business equipment increased 0.2 percent
  • Output of machinery and wood products increased in December

— With assistance by Kristy Scheuble

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