January 14, 2022 | 10:13
Factory Output Driven Down in December
U.S. industrial production unexpectedly edged down 0.1% in December though the prior month was revised up two ticks to +0.7%. The spike in Omicron cases likely added to ongoing labour challenges that disrupted production.
Manufacturing, the largest component of the index, fell 0.3%. Production of motor vehicles and parts—a big component of factory output—sagged 1.3%, halting a two-month winning streak.
Meantime, mining jumped 2.0% while volatile utilities slumped 1.5%. The total capacity utilization rate slipped 0.1 ppts to 76.5%, marking the first drop in three months.
Bottom Line: Despite the mildly disappointing wilt in December, we would point out that the bigger picture remains solid, as industrial output showed broad-based strength through much of last year, amid strong demand for consumer goods and business equipment. For all of 2021, manufacturing production jumped 6.2%, the fastest pace since 1998, despite supply constraints, weather-related events and labour shortages. And, we expect still-healthy production this year, buoyed by lean inventories and continued sturdy demand.