U.S. industrial output grows in December on rise in utilities production, economy likely track 2.2 pct growth in Q4

The U.S. industrial output expanded in December, coming above market expectations. Industrial production grew 0.8 percent sequentially, as compared with consensus projection of 0.6 percent. The headline level grew owing to utilities production that rose 6.6 percent sequentially following three straight monthly declines.

In spite of the above expectations figure, the December report is views as slightly weak given the historical volatility of utilities. Also, manufacturing, which contributes around 79 percent to the total output, grew just 0.2 percent sequentially as compared with consensus expectations for a stronger recovery.

Motor vehicles and parts rose just 1.8 percent sequentially and 6.6 percent year-on-year, in line with the robust pace of auto sales in recent months. But excluding motor vehicles manufacturing remained flat in December and dropped 0.4 percent year-on-year. Moreover, the industrial production print for November was also downwardly revised to -0.7 percent sequentially from -0.4 percent as reported earlier.

Data on mining, utilities and manufacturing were greatly offsetting, while strength in components that feed into estimates of structures investment was countered by less inventory accumulation, stated Barclays in a research report.

“Altogether, we continue to track 2.2% on Q4 GDP following the December report on industrial production”, added Barclays.

At 06:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -24.5202. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex