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US Industrial Output Slows in November

Posted by Joseph Trevisani on Dec 15, 2017 2:25:08 PM

American industrial output moderated its torrid growth pace in November as manufacturing slipped from its largest monthly gain in seven years.

Federal Reserve data showed a rise of 0.2 percent in industrial production last month following October's revised 1.2 percent jump which had been initially released at 0.9 percent. Analysts had forecast a 0.3 percent increase.

Industrial Production

ip dec 15.png

Factory output also rose 0.2 percent in November on a 0.3 percent median estimate after October's upwardly revised 1.4 percent explosio. It had been the biggest single month since May 2010. 

The surge in November's industrial activity which encompasses  manufacturing, mines and utilities but was led by the factory sector reflected a restoration in output  and replacement orders following the Gulf and Florida hurricanes of August and September. 

Manufacturing Output

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Capacity utilization, the measure of the amount of the overall industrial plant in use edged to 77.1 percent in November from 77.0 percent. 

Capacity Utilization

cap util dec 15.png

Factory output has remained strong as consumer confidence has been bolstered by a robust job market and business investment has continued to improve plant and equipment.

Retail sales for November, released on Thursday at 0.8 percent on a 0.3 percent forecast and with a revised October result that more than doubled from 0.2 percent to 0.5 percent, are indicators that the more than 3 percent economic growth in the second and third quarters will likely sustain into the final three months  the year.  

Likewise the' retail sales control group', the consumption statistic that is used by the government in the GDP calculation climbed 0.8 percent in November, well ahead of the 0.3 percent forecast. 

Retail Sales 'Control'

sales control dec 15.png

The latest forecast from the Atlanta Fed's GDPNow economic model posits a 3.3 percent annual expansion rate in the fourth quarter.

The recent gains in manufacturing production, advancing for three straight months, stem from a broad increase in purchase of durable goods, items designed to last at least three years. Capacity utilization in the manufacturing sector rose to 76.4 percent in November, the highest since May 2008.

The increase in November's overall industrial production was prompted by a 3 percent jump in oil and gas drilling and production as activity in and around the Gulf returned to normal following the summer's storms. Absent the recovery in energy production industrial output would have been flat, according to the Federal Reserve. 

 Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Thompson/reuters, WorldWideMarkets Alpha Trader

 

 

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