Industrial Production: Declines Moderately

Bottom Line: Industrial activity declined in December, more than expectations. Both mining and utility production fell. Industrial production in Q4 declined at an annual rate of 3.5%, sharply slower than +2% in Q3. That said, industrial output growth had been on a slowing trend since last December and has now started to decline in the last 2 months. Industrial Production FELL by 0.4% in December, compared with market expectations for a decline of 0.2%. Moreover, the prior month was revised from -0.6% down to -0.9%. Output is now 1.8% BELOW its year ago level. Year-over-year output has been on a slowing trend since last December and has now started to decline in the last 2 months. In December, Mining Output FELL by 0.8% for 4th consecutive month and is now 11.3% BELOW its year ago level. Utility Generation FELL by 2.0% and is now 6.8% BELOW its year ago level. Manufacturing Output FELL by 0.1% and is now only 0.8% ABOVE its year ago level. Output in high-tech industries rose by 1.4%. Meanwhile, output in the motor vehicle industry declined by 1.8%. Excluding both the high-tech and motor vehicles industries, industrial output was unchanged. Capacity Utilization FELL by 0.4 points to 76.5%, compared with market expectations for a smaller decline to 76.8%. Moreover, the prior month was revised from 77.0% down to 76.9%. Capacity utilization rate is now 2.5 percentage points below its year ago level and 3.6 percentage points below its long-run (1972–2014) average.