Industrial production increased 0.4 percent in November after a decline of 0.2 percent in October. The rate of change for industrial production was revised down in October but up in September; the net effect of the revisions from June to October left the level of industrial production in October about the same as was previously reported. In the manufacturing sector, output advanced 0.3 percent in November with gains in both durables and nondurables. The gains among durable goods industries were particularly broad-based; only the production of motor vehicles and parts decreased substantially. Excluding motor vehicles and parts, overall factory output advanced 0.7 percent. The output of mines edged lower, but the output of utilities moved up 1.9 percent as the return of more seasonal temperatures boosted the demand for heating. At 93.9 percent of its 2007 average, total industrial production in November was 5.4 percent above its level a year earlier. The capacity utilization rate for total industry rose to 75.2 percent, a rate 5.4 percentage points below its average from 1972 to 2009.
Consider this additional information:
Manufacturing production increased 0.3 percent in November. The factory operating rate moved up to 72.8 percent, its highest level in more than two years but still well below its long-run (1972 to 2009) average of 79.2 percent. The output of durable goods rose 0.4 percent, and with the exceptions of nonmetallic mineral products and motor vehicles and parts, output advanced in all of the major industries. Gains of 1 percent or more were reported in wood products, primary metals, fabricated metal products, machinery, computer and electronic products, and miscellaneous manufacturing. The production of nondurable goods rose 0.2 percent. Increases of 1 percent or more occurred in paper, printing and support, and plastics and rubber products. The indexes for petroleum and coal products and for chemicals both advanced around 0.5 percent. However, the production of food, beverage, and tobacco products declined and more than retraced the previous month's increase. The output indexes for textile and product mills and for apparel and leather both moved lower.
In November, the index for other manufacturing (non-NAICS), which consists of publishing and logging, fell 0.7 percent and was more than 7 percent below its year-earlier level. The output of mines edged down 0.1 percent in November, and the capacity utilization rate for mining moved down to 88.7 percent, a level 1.3 percentage points above its average from 1972 to 2009. The output of utilities rose 1.9 percent, as the output of both electric utilities and natural gas utilities increased. The operating rate for utilities rose, to 78.4 percent, but remained below its readings during the summer.
And we have the following information for market groups:
The production of consumer goods fell 0.5 percent in November. The output of consumer durable goods moved down 2.3 percent in large part because of a drop of 6.0 percent in the production of automotive products. Production advanced for all of the other major durable goods categories: home electronics; appliances, furniture, and carpeting; and miscellaneous consumer durables. The output of nondurable consumer goods was unchanged in November following declines in the two previous months. Among non-energy nondurable goods, the indexes for foods and tobacco, for clothing, and for chemical products all posted declines, but the output of paper products moved up 0.3 percent. The production of consumer energy products rose 1.9 percent as a result of both higher sales to residences by utilities and an increase in gasoline refining.
The output of business equipment rose 0.9 percent in November and was 12.5 percent above its level a year earlier. The indexes for industrial and other equipment and for information processing equipment both rose about 1-1/4 percent. The production of transit equipment fell 0.6 percent, which more than reversed its October increase.In November, the index for defense and space equipment moved up 1.5 percent--its second consecutive monthly increase. The production indexes for construction supplies and business supplies both rose 0.9 percent in November. Over the 12 months ending in November, the output of construction supplies has moved up 6.0 percent, while the output of business supplies has increased 1.4 percent. The production of materials increased 0.7 percent in November, which more than reversed the October decline. The output of durable materials advanced 0.9 percent, as a decline in the output of consumer parts was more than offset by gains in the production of equipment parts and other durable materials. The output of non-energy nondurable materials also rose 0.9 percent. Within this market group, the indexes for chemicals and paper advanced following declines in the previous month. However, the production of textile materials recorded its fourth consecutive monthly decline. The production of energy materials moved higher with the gains in utilities and in support activities for oil and gas operations more than offsetting a decline in crude oil extraction.
Comments/observations in no order of importance:
- The broad based increases are welcome and indicate the manufacturing sector is still in a strong recovery. It also indicates the moderate slowdown that was caused by the EU situation in the spring appears to be over.
- The increase in business equipment output should be a good harbinger of the business and equipment investment sub-category of the GDP report. This is further bolstered by the increase in communication equipment.
- The increase in construction supplies is interesting and is somewhat confirmed by lumber prices, which tried to rally off a bottom, fell back and are currently moving a bit higher.
- The broad increase in consumer durables is very encouraging, and indicates that businesses are thinking consumers will increase their purchases of these items. This bodes well, as these are typically more expensive items that usually require some type of financing to purchase.
Simply put, this is a very encouraging report.