Industrial production fell, manufacturing output rose in December

Industrial production decreased 0.3% in December as increases of 0.2% in manufacturing and 1.3% in mining were outweighed by a 5.6% decline in utilities, according to the Federal Reserve. The decline in utilities could be attributed to a large decrease in demand for heating, with a warm December following a cold November.

In the fourth quarter of 2019, total industrial production fell 0.5% from the same period in 2018. Total industrial production fell 1% in December, from the same month in 2018. Capacity use for the industrial sector declined 0.4 percentage points to 77% in December, and the rate was 2.8 percentage points lower than its long-run (1972-2018) average.

The major market groups had mixed results in December. Indexes including utility output (consumer energy products, business supplies and energy materials) all fell. Meanwhile, declines in the output of motor vehicles and parts led to decreases in consumer durables, transit equipment and durable goods materials. Most other indexes increased, and those that rose at least 1% were information processing equipment, defense and space equipment, construction supplies and nondurable goods materials.

While manufacturing output rose 0.2% in December, it declined 1% in the fourth quarter, from the same period in 2018. The output rose in December amid declines of 4.6% for motor vehicles and parts. Assemblies of light motor vehicles declined to 10.3 million units in December, from 11.2 million units in November. Excluding the motor vehicle sector, factory output rose 0.5%. The index for durable goods manufacturing fell by 0.2%, and the decrease in motor vehicles outweighed increases in other industries. The index for nonmetallic mineral products rose 2.3%, and among durables, it had the largest increase.

The production of nondurables rose 0.6% and was driven by increases of more than 1% for petroleum and coal products and for food, beverage and tobacco products. The output of other manufacturing (publishing and logging) fell by 0.2%. Mining output rose 1.3%, and most of the increase could be attributed to oil and gas extraction. The index for mining increased by about 2% in the fourth quarter, from the same period in 2018.

Capacity use for manufacturing rose 0.1 percentage points in December to 75.2% and was about 3.1 percentage points below its long-run average. The use rate for mining increased to 89.6% and was above its long-run average of 87.1%. The operating rate for utilities declined to 73.5%, and the rate was about 12 percentage points below the long-run average.

NOVEMBER TRADE
The combined value of distributive trade sales and manufacturers’ shipments, adjusted for seasonal and trading-day differences but not for price changes, rose 0.7% to $1.47 trillion in November 2019, from October 2019, according to the U.S. Census Bureau. The value was up 1%, from November 2018.

The Census Bureau announced Jan. 16 new manufacturing and trade statistics for November 2019.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, fell by 0.2% to $2.04 trillion in November, from October. The inventories were up 2.8%, from November 2018.

The total business inventories/sales ratio based on seasonally adjusted data at the end of November was 1.39. The November 2018 ratio was 1.37.