• 10 hours $5 Million Gold Toilet Vanishes
  • 10 hours Gold On The Rise After Fed Rate Cut
  • 13 hours Oil Trader Loses $320 Million On Derivative Bets
  • 1 day S&P 500 Officially In An Earnings Recession
  • 2 days Miners Are Weathering The Trade War Storm
  • 2 days UK Credit Card Interest Rates Are Skyrocketing
  • 2 days From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 3 days Are Smart TVs Spying On Us?
  • 3 days Is Fossil Fuel Divestment A Waste Of Time?
  • 3 days A Russian Billionaire’s Space Quest To Save Humanity
  • 4 days Markets Take Breather As Consolidation Continues
  • 4 days Economic Woes Weigh On Copper Prices
  • 4 days World's Largest IPO At Risk Following Drone Strikes
  • 4 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 5 days What’s Behind The Silver Sell-Off?
  • 5 days The Retail Apocalypse Is Accelerating
  • 5 days The Top Tech Stocks Of The Year
  • 5 days America’s Workforce Elderly Workforce To Double By 2028
  • 6 days Toyota Tests Solar-Powered Prius
  • 6 days Why The Gold Rally Flatlined
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Industrial Production Jumps on Utilities and Mining

Industrial Production rose 0.9% in December topping the Econoday high estimate of 0.8%. The consensus estimate was 0.4%.

The good news pretty much stops there. Revisions took the November reading down from a reported 0.2% to -0.1%.

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.

Fed Industrial Production Report

Let's dive into the December Federal Reserve Industrial Production and Capacity Utilization report for more details.

Industry Groups

  • In December, manufacturing output edged up 0.1 percent and was 2.4 percent above its year-earlier level. In the fourth quarter, the index for manufacturing moved up at an annual rate of 7.0 percent.
  • The gain in manufacturing in December reflected increases of 0.3 percent and 0.2 percent in the indexes for durables and for other manufacturing (publishing and logging), respectively; the index for nondurables edged down 0.1 percent.
  • Within durables, gains were widespread, with the largest advance, 2.0 percent, registered by motor vehicles and parts. Among nondurables, increases for most major industries were offset by declines in petroleum and coal products, in chemicals, and in plastics and rubber products.
  • The output of mines rose 1.6 percent in December primarily because of a gain posted by oil and gas extraction; the index was up 11.5 percent from its year-earlier level. In the fourth quarter, mining output advanced at an annual rate of 12.7 percent after being held down by the hurricanes in the third quarter.

Utilization

https://s3-us-west-2.amazonaws.com/maven-user-photos/mishtalk/economics/zmfATcSa4EegwR7v_znq6Q/csPR4K2dNkKyguMkf31VZA

Surprisingly Positive?

Econoday calls the report surprisingly positive. I call it unsurprisingly weak.

The December strength was weather-related and auto-related. The former is meaningless and the latter is due to the waning effect of hurricanes.

Do we need any more manufacturing capacity? It seems not.

This report may add to GDP estimates for the fourth quarter. But if so, it will be at the expense of first-quarter GDP.

By Mike Shedlock

Back to homepage

Leave a comment

Leave a comment