Industrial production was down 3.1 percent on the month in December, much steeper than the consensus. Energy rose 0.9 percent, while consumer goods and capital goods both declined 3.3 percent and intermediate goods declined 3.6 percent.

Year-over-year, output was down a steep 7.1 percent, largely due to capital goods, intermediate goods and consumer goods which posted falls of 10.7 percent, 9.5 percent and 7.3 percent respectively. These offset the 5.5 percent increase in energy.

In sum, goods production remained weak, with output contracting 1.2 percent over the last three months.

The consensus sees industrial production retracing by 0.2 percent on the month in December after rising by 0.3 percent in November.

Industrial production measures the physical output of the nation's factories, mines and utilities. Construction is excluded. Approximately 4,100 companies provide data on more than 8,000 monthly flows of production.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios. Like the PPI and the orders data, construction is excluded from the data. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.