- Prior was +0.4%
- Capacity utilization 76.2% vs 76.5% expected
- Manufacturing output +0.6% vs +0.4% expected
The Federal Reserve's industrial production data for the fall was complicated by delayed releases stemming from the government shutdown, with October and November figures published jointly on December 23 and December data following on January 16. Despite the reporting disruptions, the data painted a picture of a sluggish manufacturing sector offset by volatile swings in utilities and mining, with a notably stronger finish to the year.
In September, industrial production edged up 0.1% after a revised 0.3% decline in August, with total IP growing at a 1.1% annual rate in Q3. Manufacturing output was flat on the month, as gains in aerospace, fabricated metals, and computer and electronic products were offset by a 2.2% drop in motor vehicles and parts. Utilities output rebounded 1.1% after a 3.0% plunge the prior month, while mining was unchanged. Capacity utilization held steady at 75.9%, sitting 3.6 percentage points below its long-run average. Total IP stood 1.6% above its year-earlier level.
The combined October-November release showed IP averaging 0.1% monthly growth over the two months. October saw a 0.1% decline, dragged down by a 0.4% drop in manufacturing output. November brought a partial recovery with IP rising 0.2% (later revised up to 0.4%), though manufacturing output was initially reported flat (subsequently revised to +0.3%). There were meaningful swings in both mining and utilities across the two months, though both sectors posted net gains. Capacity utilization stood at 76.0% in November, 3.5 percentage points below its long-run average. Total IP was 2.5% above its year-ago level.
December capped off the year with a solid 0.4% increase in IP, beating market expectations for a 0.1% gain. Manufacturing output rose 0.2%, with durable goods up 0.1% and nondurables up 0.3%. Within durables, primary metals led with a 2.4% gain — the largest in six months — while electrical equipment rose 1.7%, boosted by data center construction. However, motor vehicles and parts remained weak, and wood products fell 2.3% for the fourth consecutive month amid tariff pressures and housing affordability challenges. Utilities output surged 2.6% on cold weather-driven heating demand, while mining fell 0.7% as low oil prices discouraged drilling and coal output dropped 4.3%.
For Q4 as a whole, total IP grew at a 0.7% annual rate, while manufacturing output actually declined at a 0.7% annual rate — underscoring the sector's continued struggles. On a brighter note, IP grew 2.2% year-over-year in Q4, the best annual reading since 2022 following full-year contractions in 2023 and 2024. The total IP index stood at 102.3% of its 2017 average in December, 2.0% above year-earlier levels. Capacity utilization ticked up to 76.3%, still 3.2 percentage points below its long-run average, suggesting ample slack in the industrial sector. As Capital Economics noted, despite tariffs intended to boost domestic manufacturing, no meaningful renaissance has materialized.
