U.S. industrial production dropped more than expected in the month of December. On a sequential basis, industrial production fell 0.3 percent, as compared with consensus expectations of a fall of 0.2 percent and prior month’s rise of 0.8 percent. Even if the overall data shows a fall, the composition of the report had a favourable tilt.
Most of the fall was recorded in the utility component, where changes are almost always a function of the weather. Activity in manufacturing and mining are driven by economic fundamentals, and both of these components rose in December, rising 0.2 percent and 1.3 percent, respectively. The rise in manufacturing occurred in spite of a fall of 4.6 percent in the motor vehicle industry.
That retreat pushed activity from the upper portion to the middle of its recent range, noted Daiwa Capital Markets Research in a report. Production in other manufacturing areas was generally favourable, as 13 of the remaining 19 industries posted gains. Manufacturing activity lost ground in 2019, as the level of production in December was shy of readings in late 2018, but the downtrend was mild. Mining activity dropped in the three months before December and it showed little net change in the early months of 2019.
“However, the pickup in December more than offset the dips from September to November and moved activity to a new record. The latest observation is only marginally higher than several other recent readings, but the latest change was enough to show activity drifting higher from already impressive levels”, added Daiwa Capital Markets Research.
