The Federal Reserve on Tuesday said its index of industrial production, a measure of output at factories, mines and utilities, rose last month as output continued to recover from the depths of the economic shutdown this spring.
Total production rose 0.4% in November, slightly above the consensus of 0.3%.
Total production rose 0.4% in November, slightly above the consensus of 0.3% and following a 0.2% downwardly revised October reading. The seventh straight month of advances was driven by manufacturing and mining, with vehicle sales and parts increasing 5.3%. Even with that improvement, though, output in November was still 3.6% lower than the pre-pandemic levels.
Manufacturing, the biggest component of production, rose 0.8%, after a 1.0% increase in October. The index for durable manufacturing rose 1.5%, with widespread gains across its components.
In addition to the large increase for motor vehicles and parts, output moved up notably for primary metals, computers and electronics, aerospace and miscellaneous transportation equipment, and miscellaneous manufacturing.
The index for nondurables edged up 0.1% in November after posting an increase of 1.4% in October. Utility production rose 3.9%, and mining output fell 0.6% and remains 14.4% below its level a year ago.
Overall capacity utilization rose to 73.3% in November from a revised 73% in October, which is 6.5% below its long-run average but 9.1% above its April low. Economists had expected capacity utilization to reach 73% in November. Capacity utilization for manufacturing rose 0.6% in November to 72.6%, 12.5% higher than its trough in April but still 5.6% below its long-run average.
It is clear that U.S. manufacturing activity continues to recover from the pandemic-induced depths, and we expect that strong domestic demand for goods, including everything housing-related, will continue to support manufacturing.
We also expect manufacturers will benefit over the next few months from the recovery in China’s industrial sector, which tends to lead U.S. manufacturing by a few months, and the weakening U.S. dollar, which will continue to make U.S. manufacturers more competitive.
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