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FR: Industrial Production
| Actual | Previous | Revised | |
| Month over Month | -0.8% | -0.1% | 0.5% |
| Year over Year | 2.1% | 2.1% | 2.2% |
Highlights
Manufacturing output fell at its fastest rate since August, contracting 0.8 percent month-on-month in December when it increased a revised 0.5 (0.1) percent. Compared to December of 2024, production was up 2.1 percent after a 2.2 percent increase in November.
The main driver behind the decline was a 9.9 percent drop in the volatile transportation equipment sector. It was the biggest month-on-month drop since falling 10.3 percent in November 2021. Compared to a year-ago, however, production was up 12.4 percent.
Other sectors were more resilient, with the manufacture of machinery and equipment up 0.7 percent in December and that of food and beverages gaining 1.4 percent.
Among the major industrial goods sectors, the drop in transportation equipment manifested itself in capital goods which fell 3.4 percent month-on-month in December. This comes after a 2.1 percent gain the previous month.
Consumer durables also saw a contraction in December, falling 2.5 percent after a 1.6 percent increase in November. Consumer non-durable goods output rose 1.5 percent while intermediate goods output rose 0.9 percent from November.
Total industry output fell by 0.7 percent in December, although it is 1.8 percent above its year-ago level.
Today's data, although lagging the PMI reports, shows the manufacturing sector facing challenges. While companies report being more optimistic about the coming twelve months, there is little evidence at present that optimism will be rewarded.
Definition
Industrial production measures the physical output of the nation's factories, mines and utilities. Manufacturing is seen as the best guide to underlying developments as some sectors can be very volatile and cause misleadingly large short-term swings in total industrial production.
Description
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 won't 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.