The Federal Reserve Board said that industrial production rose 1.1 percent in November, more than offsetting the revised 0.7 percent decline experienced in October. A fair share of the decrease in October could be explained by slowdowns resulting from Hurricane Sandy, so these figures suggest that production impacted by the storm have been restored.
The bottom line is that industrial production appears to be recovering from some of the weaknesses of the autumn. However, even with these gains, manufacturing production remains 0.6 percent below where it was in July. That is true for capacity utilization, as well. While manufacturing capacity utilization improved from 75.9 percent in October to 76.6 percent in November, it is still below the 77.5 percent rate observed in July. This indicates that larger weaknesses – including uncertainties related to slowing global growth and fiscal cliff – continue to have an impact.
The good news is that the improvements in November were mostly broad-based in the manufacturing sector. Both durable and nondurable goods production were higher, up 1.6 percent and 0.5 percent, respectively. Sectors with the largest monthly gains included motor vehicles and parts (up 4.5 percent), primary metals (up 3.7 percent), wood products (up 3.4 percent), miscellaneous durables (up 3.4 percent), apparel and leather (up 2.5 percent), electrical equipment and appliances (up 2.3 percent), and plastics and rubber products (up 2.1 percent). As we saw in yesterday’s retail sales figures, at least part of these increases might be explained by repairs and replacements resulting from Hurricane Sandy.
Some areas of weakness were computer and electronic products (down 0.4 percent), aerospace (down 0.3 percent), petroleum and coal products (down 0.2 percent), and chemicals (down 0.2 percent).
Chad Moutray is chief economist, National Association of Manufacturers.