December 2014 Industrial Production, Capacity Utilization and Capacity

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Industrial production (IP) decreased 0.1% in December (in line with expectations) after rising 1.3% in November. The decrease in December reflected a sharp drop in the output of utilities (utilities make up 9.8% of the IP index), as warmer-than-usual temperatures reduced demand for heating; excluding utilities, IP rose 0.7%. Manufacturing (representing 74.3% of the IP index) posted a gain of 0.3% for its fourth consecutive monthly increase. The index for mining (15.9% of the IP index) increased 2.2% after falling in the previous two months. Wood Products output retreated by 1.2% while Paper rose 0.1%.

At 106.5% of its 2007 average, total IP in December was 4.9% above its level of a year earlier. For 4Q2014 as a whole, IP advanced at an annual rate of 5.6%, with widespread gains among the major market and industry groups. 

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Capacity utilization (CU) for the industrial sector decreased 0.3 percentage point in December to 79.7%, a rate that is 0.4 percentage point below its long-run (1972–2013) average. Wood Products CU fell by 1.6% while Paper rose 0.3%. 

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Capacity at the all-industries and manufacturing levels moved higher by, respectively, 0.3 and 0.2%. Wood Products extended its ongoing upward trend (since July 2013) when increasing by 0.4%. Paper, on the other hand, contracted by 0.2% to another new low.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.