WASHINGTON, January 18 2024: Production at U.S. factories barely rose in December as increases in motor vehicle output were partially blunted by declines in machinery as well as electrical equipment, appliances and components.
Manufacturing output edged up 0.1% last month, the Federal Reserve said on Wednesday. Data for November was revised lower to show production at factories rising 0.2% instead of 0.3% as previously reported. Economists polled by Reuters had forecast factory output would be unchanged.
Production contracted at a 2.2% rate in the fourth quarter, likely weighed down by the United Auto Workers’ 1-1/2-months long strikes against Detroit’s “Big Three” automakers. Output fell at a 0.3% pace in the July-September quarter.
Excluding motor vehicles and parts, manufacturing output dipped 0.1%. Overall production at factories increased 1.2% on a year-on-year basis in December.
Manufacturing, which accounts for 10.3% of the economy, continues to be hobbled by 525 basis points worth of interest rate hikes from the U.S. central bank since March 2022.
The New York Fed’s Empire State survey on Tuesday showed factory activity in the region slumping further into recession in January, with measures of new orders, employment and hours worked all plummeting.
Still, there are some pockets of strength in manufacturing. Motor vehicle and parts output increased 1.6% last month after advancing 7.4% in November. There were increases in the production of furniture and related products.
But output of machinery fell 1.2%, while the production of electrical equipment, appliances and components dropped 2.4%. Durable manufacturing production fell 0.4%. Production of nondurable goods rose 0.6% amid gains in the output petroleum and coal, plastics and rubber as well as food, beverage and tobacco products.
Mining output rebounded 0.9% after dropping 1.0% in November. Utilities production fell 1.0% amid unseasonably mild weather. That followed a 0.7% decrease in November.
Overall industrial production gained 0.1% in December after being unchanged in November. Industrial production decreased at a 3.1% rate in the fourth quarter after increasing at a 1.8% pace in the July-September quarter.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.6% in December. The operating rate for the manufacturing sector was also unchanged at 77.1%.
