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Industrial Production: Utilities  Rebound, Revealing Improving Trend

January 18, 2017
Bottom Line: Industrial activity rose in December after declining in November. The headline number was driven higher by utility generation, which rebounded sharply with colder weather in December. The overall trend in industrial production is improving slightly with 2016 breaking back into positive territory, growing just 0.5% after shrinking 2.3% in 2015. Mining output, including energy extraction, was a major drag on IP in 2015 (down 11%) but is up 12% and 7% in the last 3- and 6-months, respectively, on an annualized basis. Manufacturing, also a drag last year, is up 1.2% annualized in the last 3 months and 0.4% in the last 6 months.

Industrial Production ROSE by 0.9% in December, compared with market expectations for a decline of 0.3%. Moreover, the prior month was revised from -0.4% down to -0.7%. Output is now 0.5% ABOVE its year ago level.

In December, Mining Output ROSE by 0.1%, and is now 2.7% BELOW its year ago level. Utility Generation ROSE by 6.6% and is now 6.2% ABOVE its year ago level.

Manufacturing Output ROSE by 0.2% but is now only 0.2% ABOVE its year ago level. Output in high-tech industries rose by 0.3%. Meanwhile, output in the motor vehicle industry rose by 1.8%. Excluding both the high-tech and motor vehicles industries, industrial output was unchanged.

Capacity Utilization ROSE by 0.6 points to 75.5%, compared with market expectations for a smaller increase to 75.1%. Moreover, the prior month was revised from 75.0% to 74.9%. Capacity utilization rate is now 0.1 percentage points above its year ago level and 4.5 percentage points below its long-run (1972–2015) average.