Friday, 14 of December of 2018

Economics. Explained.  

Industrial Production

December 14, 2018

Industrial production jumped 0.6%  in November after having declined 0.2% in October.   During the past year industrial production has risen 3.9%.  So despite monthly wiggles, production continues to trend upwards.

Breaking industrial production down into its three major sub-components,  the Fed indicated that manufacturing production (which represents 75% of the index) was unchanged in November after having declined 0.1% in October.  During the past year  factory output has risen 2.0% (red line, right scale).   The factory sector has cooled in the past two months but the slowdown is expected to be temporary.

Mining (14%) output rose 1.7% in November after having fallen 0.7% in October.  Over the past year mining production has risen 13.2%.  Most of the recent upturn in mining has been concentrated in oil and gas drilling activity.  Oil and gas drilling rose 0.1% in November after having jumped 1.6% in October.     Over the course of the past year oil and gas well drilling has risen 19.7%.

Utilities output jumped jumped 3.3% in November as unusually cold weather boosted the need for heating.  Utility output rose 0.2% in October..  During the past year utility output has risen 4.3%.

Production of high tech equipment surged by 1.6% in November after having declined 0.3% in October.  Over the past year high tech has risen 7.5%.  Thus, the high tech sector sector appears to be expanding nicely. This is an indication that nonresidential investment is continuing to climb which is, in turn, a signal of renewed growth in productivity.

Capacity utilization in the manufacturing sector fell 0.1% in November to 75.7%.  It remains below the 77.4% level that is generally regarded as effective peak capacity.  However, factory owners will soon have to spend more money on technology and re-furbishing or expanding their assembly lines to boost output.

Stephen Slifer


Charleston, SC

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