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Total
industrial
production (IP) declined 0.4% in December (-0.2% expected),
primarily as a result of cutbacks in utilities and mining. Also, the decrease
for total IP in November was larger than previously reported (-0.9% instead of
the original -0.6%), but upward revisions to earlier months left the level
of the index in November only slightly below its initial estimate. For 4Q
as a whole, IP fell at an annual rate of 3.4%. At 106.0% of its 2012 average,
total IP in December was 1.8% below its year-earlier level.
Industry
Groups
Manufacturing
output slipped 0.1% in December, but increased at an annual rate of 0.5% in 4Q.
Factory output in December was 0.8% above its year-earlier level. The output of
durable goods moved up slightly in December. Among the categories of durables,
the indexes for motor vehicles and parts and for primary metals each dropped
more than 1.5%, while the indexes for electrical equipment, appliances, and
components and for computer and electronic products each increased more than
1.5%. Wood Products output rose by 0.7%.
The
output of nondurables declined 0.2%, led by a drop of 1.2% for petroleum and
coal products and by a reduction of 0.8% for paper. These declines were
partially offset by increases for plastics and rubber products and for textile
and product mills. The output of other manufacturing industries (publishing and
logging) fell 0.5%. The index for mining declined 0.8% because of a large drop
in coal mining, while the index for utilities decreased 2.0% thanks to continued
warmer-than-usual temperatures that reduced demand for heating; both major
categories recorded drops of more than 15% at an annual rate in 4Q.
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Capacity
utilization (CU) for the industrial sector decreased 0.4 percentage point (-0.5%)
in December to 76.5% (76.9% expected), a rate that is 3.6 percentage points
below its long-run (1972–2014) average.
Manufacturing
CU was little changed in December at 76.0%, a rate 2.5 percentage points below
its long-run average. The operating rate for durable goods industries held
steady at 75.8%, roughly 1 percentage point below its long-run average; Wood
Products CU was at 71.8% (+0.5%).
At 77.6%, the operating rate for nondurable
goods industries was 2.8 percentage points below its long-run average; Paper CU
was at 81.2% (-0.8%). Utilization for other manufacturing industries
(publishing and logging) was down 0.3 percentage point to 60.0%. The
utilization rate for mining fell 0.8 percentage point to 78.4%, and the rate
for utilities dropped 1.6 percentage points to 73.2%, the lowest rate in the
history of the series, which began in 1972.
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Capacity
at the all-industries and manufacturing levels moved higher -- All-industries: +0.1%
(+1.5% YoY) to 138.6% of 2012 output; Manufacturing: +0.1% (+1.4% YoY) to 139.3%.
Wood Products extended the upward trend that has been ongoing since November
2013 when increasing by 0.2% (+2.5% YoY) to 160.7%. Paper was unchanged (-0.2%
YoY) at 116.8%.
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.
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