U.S. Industrial Production Posts another Decline in November

Industrial production unexpectedly fell 0.2% m/m (+2.5% y/y) in November following an unrevised 0.1% monthly decline in October. There was, however, a meaningful upward revision to September (+0.4% m/m versus +0.1% previously). The consensus forecast had looked for a 0.1% m/m increase in November. This was the third monthly decline in the past four months, pointing to an industrial sector stressed by a slowing global economy and an aggressive tightening of U.S. monetary policy.

Manufacturing output slumped 0.6% m/m (+1.2% y/y) after an upwardly revised 0.3% m/m gain in October (previously 0.1% m/m). This was the first monthly decline in manufacturing output in the past five months. Mining output declined 0.7% m/m (+6.3% y/y), its third monthly decline in the past four months and the same monthly decrease as in October. By contrast, utilities production rebounded 3.6% m/m (4.6% y/y) in November, its first increase in four months, following a 1.3% monthly decline in October (revised from -1.5% m/m).

Reflecting the decline in output, the rate of capacity utilization fell to 79.7% in November from an unrevised 79.9% in October. This was the lowest reading since February. The rate of capacity utilization in manufacturing declined to 78.9%, its lowest reading since June, from an unrevised at 79.5% in October. Its expansion peak was 80.0% in April.

By industry groups, the decline in manufacturing output reflected a 0.6% m/m decrease (+2.7% y/y) in durable goods production and also a 0.6% m/m fall (unchanged y/y) in the production of nondurable goods. The monthly decline in durable goods production was led by a 2.8% m/m drop in motor vehicle output, a 2.4% m/m decline in the production of electrical equipment and appliances, and a 2.0% monthly decrease in furniture production. By contrast, production of wood products rebounded 3.6% m/m and production of aerospace and miscellaneous transportation equipment increased 1.1% m/m. The decline in nondurables production was widely spread with printing output (up 1.6% m/m) the only major sector posting a monthly gain.

By market groups, the production of consumer goods fell 0.4% m/m in November after a 0.7% m/m increase in October (revised up from +0.1% m/m). Output of business equipment dropped 0.8% m/m following a 0.5% monthly gain in October (revised down from +0.8% m/m). Construction supplies fell 0.2% m/m in November on top of a 0.4% monthly decline in October. This was the third decline in the past four months/

In special classifications, energy output rose 0.6% m/m in November after a 1.1% m/m decline in October (revised down from -0.9% m/m). Output of selected high-tech industries increased 0.6% m/m in November, reversing the 0.6% m/m decline in October. Manufacturing output excluding selected high-tech industries declined 0.6% m/m following an upwardly revised 0.3% monthly gain in October (previously 0.2% m/m).

Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.