U.S. Industrial Production Regains Vigor

Dec. 15, 2009

After a flat month, industrial production rose a sharp 0.8% in November, Federal Reserve data showed on Dec. 15.

The report showed output at U.S. factories, mines and utilities was lifted by a 1.1% surge in manufacturing, led by gains in automobiles, appliances, home furnishings as well as consumer goods. Mining output jumped 2.1 % while utility output fell 1.8% due to mild weather that reduced demand for heating.

Even with the latest rise, industrial production is down 5.1% from a year ago.

Capacity utilization -- a sign of slack in the industrial economy -- rose 0.7 percentage points to 71.3%.

"The strong gain in November's industrial activity has to be put in context of the flattening out in October. Averaged over two months, the industrial gain is moderately strong but has much room to improve given that the factory utilization rate is only 68.4% when the long term average manufacturing utilization rate is 79.6%," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.

"Sixteen of the 20 manufacturing industries increased production in November which shows widespread momentum across many goods producing sectors," he added. "Nevertheless, the materials market group has performed the best in the recovery, indicating that an inventory swing from liquidation to less destocking is playing a major part in the industrial rebound. In addition, the devaluation of the U.S. dollar and strong economic rebound in Asia has improved U.S. export activity. We expect continued moderate growth in industrial activity in 2010."

Even with the latest rise, industrial production is down 5.1% from a year ago, reflecting the deep recession.

Copyright Agence France-Presse, IW Staff

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