FX.co ★ U.S. Industrial Production Jumps In December As Utilities, Mining Output Surges

Industrial production in the United States experienced a significant and unexpected increase in December, as reported by the Federal Reserve on Friday. According to the report, industrial production surged by 0.9% for the month, following a revised 0.2% rise in November.

Prior estimates by economists had projected a modest 0.3% increase in industrial output compared to the initial 0.1% decline reported for November. The larger-than-anticipated growth in December was largely driven by notable recoveries in both the utilities and mining sectors.

Utilities output saw a remarkable rise of 2.1% in December, rebounding from a 0.7% decline in November, while mining output increased by 1.8%, following a 0.5% drop the previous month. Additionally, manufacturing output advanced by 0.6% in December, building on a 0.4% gain in November.

The Federal Reserve highlighted that improvements in the production of aircraft and parts contributed 0.2 percentage points to the overall industrial production growth. This progress followed the resolution of a labor stoppage at Boeing (BA).

James Knightley, Chief International Economist at ING, commented, "The December data for US manufacturing and industrial output surpassed expectations, alongside upward revisions for November. Lead surveys suggest ongoing improvements, possibly indicating a shift in the sector." However, he cautioned, "Tariffs continue to pose challenges, particularly for entities with global supply chains and substantial export dependencies."

The report also noted that capacity utilization within the industrial sector climbed to 77.6% in December, up from an upwardly revised 77.0% in November. Economists had anticipated a slight increase to 77.0%, from the originally reported 76.8% for November. Specifically, capacity utilization in the mining and utilities sectors rose to 90.8% and 71.1%, respectively, while the manufacturing sector's capacity utilization increased to 76.6%.