Posted January 15, 2010
Industrial production rises
Industrial production increased 0.6 percent in December, according to the Federal Reserve.
The gain primarily resulted from an increase of 5.9 percent in electric and gas utilities due to unseasonably cold weather. Manufacturing production edged down 0.1 percent, while the output of mines rose 0.2 percent.
The sixth consecutive rise in output was in line with the expectations of most economists and underscored the industrial sector's lead in spurring recovery from recession in the world's largest economy.
Capacity utilization for manufacturing was 68.6 percent, a rate 11.0 percentage points below its average for the period from 1972 to 2008. For the fourth quarter as a whole, manufacturing output increased at an annual rate of 5.7 percent.
One industry analyst attributed virtually all of the growth to a surge in utility production (5.9 percent) in response to the premature cold snap before Christmas.
“Manufacturing production fell a modest 0.1 percent in December after posting strong 0.9 percent growth in November," said Daniel J. Meckstroth, Ph.D., chief economist for the Manufacturers Alliance/MAPI. "Raw material industries continued to lead the gains as the beneficial impact of less inventory destocking boosted growth in these industries. For the most part, manufacturing production is starting to exhibit a saw tooth pattern of strong growth followed the next month by a small decline because the pace of growth is decelerating.
“The initial burst of growth reflected the rebound from a severe recession, but now, the basic fact is that consumers are impaired with debt, jobs are still declining, and nonresidential construction activity will decline most of the year,” he added. “Fourth quarter manufacturing production increased at a 5.7 percent annual rate versus the third quarter. Unfortunately, a strong pace of manufacturing production growth cannot be maintained in a relatively weak economic recovery,” he said.
