U.S. INDUSTRIAL PRODUCTION DOWN 0.3%

U.S. FRB - January 17, 2020 - Industrial production declined 0.3 percent in December, as a decrease of 5.6 percent for utilities outweighed increases of 0.2 percent for manufacturing and 1.3 percent for mining. The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November. For the fourth quarter as a whole, total industrial production moved down at an annual rate of 0.5 percent. At 109.4 percent of its 2012 average, total industrial production was 1.0 percent lower in December than it was a year earlier. Capacity utilization for the industrial sector fell 0.4 percentage point in December to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2018) average.

Market Groups

The major market groups posted mixed results in December. Indexes that include utility output (consumer energy products, business supplies, and energy materials) all recorded declines. Likewise, a large drop in the output of motor vehicles and parts contributed to decreases registered by consumer durables, transit equipment, and durable goods materials. Most other indexes advanced, with gains of 1 percent or more posted by information processing equipment, defense and space equipment, construction supplies, and nondurable goods materials.

Industry Groups

Manufacturing output advanced 0.2 percent in December but decreased at an annual rate of 1.0 percent in the fourth quarter. The gain in December came despite a decrease of 4.6 percent for motor vehicles and parts; assemblies of light motor vehicles fell from 11.2 million units (annual rate) in November to 10.3 million units in December. Excluding the motor vehicle sector, factory output rose 0.5 percent. The index for durable goods manufacturing slipped 0.2 percent, as the decrease for motor vehicles outweighed widespread increases in other industries. The index for nonmetallic mineral products advanced 2.3 percent for the largest gain among durables. The production of nondurables moved up 0.6 percent, led by increases of more than 1 percent for petroleum and coal products and for food, beverage, and tobacco products. The output of other manufacturing (publishing and logging) decreased 0.2 percent. Mining output rose 1.3 percent, with most of the gain from oil and gas extraction; the index for mining rose at an annual rate of about 2 percent in the fourth quarter to reverse a similarly sized decrease in the third quarter. 

Capacity utilization for manufacturing edged up 0.1 percentage point in December to 75.2 percent, about 3.1 percentage points below its long-run average. The utilization rate for mining increased to 89.6 percent, remaining above its long-run average of 87.1 percent. The operating rate for utilities fell to 73.5 percent, a rate that is about 12 percentage points below its long-run average.

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