Industrial Production Expectedly Fell, Weighed Down By Utilities in December

The Federal Reserve said industrial production fell 0.3% in December, as a decline of 5.6% in utilities outweighed gains of 0.2% and 1.3% in manufacturing and mining, respectively.

Forecasts for industrial production ranged from a low of 0.5% to a high 1.1%. The consensus was 0.9%. Forecasts for manufacturing output ranged from a low of -1.0% to a high 0.2%. The consensus was 0.2%.

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% of its 2012 average, total industrial production was 1.0% 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%, a rate that is 2.8 percentage points below its long-run (1972–2018) average.

Forecasts for the capacity utilization rate ranged from a low of 76.9% to a high 77.4%. The consensus was 77.1%.

Regional manufacturing surveys in the Northeast and Mid-Atlantic signal factory activity picked up in January.

While manufacturing output rose 0.2% in December, it decreased by an annual rate of 1.0% in the fourth quarter of 2019. Worth noting, the gain posted despite a 4.6% decline for motor vehicles and parts; assemblies of light motor vehicles falling from 11.2 million units (annual rate) to 10.3 million units.

Capacity utilization for manufacturing edged up 0.1 percentage point to 75.2%, about 3.1 percentage points below its long-run average.

The utilization rate for mining increased to 89.6%, remaining above its long-run average of 87.1%. The operating rate for utilities fell to 73.5%, a rate that is about 12 percentage points below its long-run average.