Industrial Production Stays the Same

Jan. 17, 2008
Manufacturing sector also posted no growth

Industrial production was unchanged in December, as reported by the Federal Reserve on Jan. 16.

For the fourth quarter, output fell 1% (annual rate), the first quarterly decrease since the fourth quarter of 2006.

Output in the manufacturing sector was unchanged in December, after having increased 0.3% in November; manufacturing fell at an annual rate of 1.9% for the fourth quarter as a whole. The factory operating rate decreased 0.1 percentage point, to 79.7%, a level 0.1 percentage point below its 1972-2006 average.

The production of durable goods was unchanged in December and declined at an annual rate of 1.5% in the fourth quarter. Machinery, computer and electronic products, and aerospace and miscellaneous transportation equipment all posted gains, whereas nonmetallic mineral products and primary metal production posted declines of 2.1% and 1.0% respectively.

The production of nondurable goods edged down 0.1% after a gain of similar size in November.

"The Federal Reserve's initial estimate for industrial production in December shows no growth; the manufacturing sector alone also posted no growth," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "Declines in metals and industrial materials were offset by growth in aerospace, high tech, and medical equipment. We believe that today's report confirms that manufacturing is in recession. From third quarter-to-fourth quarter 2007, manufacturing industrial production fell at a 1.9% annual rate. When high tech is excluded, manufacturing industrial production declined at a 2.9% annual rate. Strong growth in exports can only cushion, not prevent, the quarterly decline in manufacturing. General growth in exports and a few bright spots (aerospace, high tech, and medical equipment) cannot mitigate weak consumer spending and increasingly slow and cautious business investment activity."

The output of utilities decreased 0.2% in December as a result of a decline at gas utilities; the output at mines edged up 0.1% after an increase of 1% in November.

Capacity utilization for total industry posted a small decrease in December, to 81.4%, a rate slightly below its year-earlier level but 0.4 percentage point above its 1972-2006 average.

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