Friday, January 15, 2016

Fed: Industrial Production decreased 0.4% in December

by Bill McBride on 1/15/2016 09:24:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production declined 0.4 percent in December, primarily as a result of cutbacks for utilities and mining. The decrease for total industrial production in November was larger than previously reported, but upward revisions to earlier months left the level of the index in November only slightly below its initial estimate. For the fourth quarter as a whole, industrial production fell at an annual rate of 3.4 percent. Manufacturing output edged down in December. The index for utilities dropped 2.0 percent, as continued warmer-than-usual temperatures reduced demand for heating. Mining production decreased 0.8 percent in December for its fourth consecutive monthly decline. At 106.0 percent of its 2012 average, total industrial production in December was 1.8 percent below its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in December to 76.5 percent, a rate that is 3.6 percentage points below its long-run (1972–2014) average.
emphasis added
Capacity Utilization Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 9.6 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 76.5% is 3.6% below the average from 1972 to 2014 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

Industrial Production The second graph shows industrial production since 1967.

Industrial production decreased 0.4% in December to 106.5. This is 21.5% above the recession low, and 0.8% above the pre-recession peak.

This was below expectations of a 0.2% decrease, mostly due to "cutbacks in utilities and mining" (warm weather and lower gasoline prices).