US manufacturing still struggling

The November IP report confirmed that manufacturing continues to underperform the overall economy. Total manufacturing output was flat in November and non-auto output increased 0.1% samr. This leaves total manufacturing up only 0.8% saar so far in 4Q15 and non-auto manufacturing up 1.1%. These anemic quarterly growth rates are close to the trend in output growth over the first 11 months of the year, 1.1% saar for all manufacturing and 0.6% for non-auto manufacturing.

Moreover, December manufacturing surveys to date point to continued weakness through the end of the year. The PMI had been holding up better than other surveys, but the flash PMI for December dropped to 51.3, its lowest reading since October 2012. The key new orders component dropped to 50.5, its lowest reading since September 2009. Results from the first regional Fed surveys for December were also generally downbeat, in line with the tone of the PMI.