The good news continues to roll in for the US economy as December industrial production rose 0.4%, beating the 0.1% consensus. The November reading was also boosted to +0.4% from +0.2%.
With that, capacity utilization rose to 76.3% from 76.0%. Manufacturing production rose by 0.2% compared to -0.2% expected. The November manufacturing number was also boosted to +0.3% from +0.2%.
Those are signs that the US industrial strategy is beginning to bear fruit but when you scale out, it’s still a long way to go. Production rose at an annualized rate of just 0.7% in Q4 while capacity utilization is 3.2 percentage points below its long-term average.
Breaking down the numbers, industrial production’s 0.4% December rise was primarily driven by a sharp 2.6% increase in utilities, largely influenced by a 12.0% surge in natural gas, something that’s unlikely to last. Manufacturing output also rose 0.2%, supported by a 0.3%increase in nondurables—specifically food, beverage, and petroleum products. Durable manufacturing edged up 0.1 percent, with significant gains in primary metals (2.4 percent) and aerospace equipment (1.5 percent) offsetting declines in motor vehicles and wood products.
Among market groups, consumer goods climbed 0.7 percent, driven by nondurables, while business equipment rose 0.8 percent due to strength in transit and industrial equipment. These gains outweighed a 0.7 percent drop in mining output, allowing the total index to finish the year 2.0 percent above 2024 levels.
If you zoom out even further, US production is flat over the past 20 years, despite a huge boom in oil production.
