Industrial Production Declined 0.3 percent in December

Industrial production decreased 0.3% in December after rising 0.8% in November. For the fourth quarter as a whole, the index declined at an annual rate of 0.5%, according to the Federal Reserve. Capacity utilization for the industrial sector decreased 0.4 percentage point in December to 77.0%, a rate that is 2.8 percentage points below its long-run (1972–2018) average.

Manufacturing output increased 0.2% in December but decreased at an annual rate of 1.0% in the fourth quarter. The gain in December came despite a decrease of 4.6% for motor vehicles and parts. The output of durables edged down 0.2% in December, as the decrease for motor vehicles outweighed widespread increases in other industries. Capacity utilization for manufacturing edged up 0.1 percentage point in December to 75.2%, 3.1 percentage points below its long-run average.

Mining output rose 1.3%, with most of the gain from oil and gas extraction, and rose at an annual rate of 2% in the fourth quarter to reverse a similarly sized decrease in the third quarter.

The output of utilities fell to 73.5%, a rate that is about 12 percentage points below its long run average; the output for natural gas fell 8.8% over the month while the output of electric declined 4.9%.

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About Author

Tyler Mondres is director of economic research at ABA and a frequent contributor on economic and fintech topics to the ABA Banking Journal.