The Federal Reserve Board said that manufacturing production increased 0.6 percent in November, building on the 0.5 percent gain seen in October. This was the fifth consecutive monthly gain in manufacturing output, with the sector recovering from weaknesses seen in the spring months. Year-over-year growth in manufacturing production has definitely improved from the 1.2 percent pace experienced in July to 2.9 percent in November.
Manufacturing capacity utilization has also increased over the past few months, up from 75.7 percent in July to 76.4 in October to 76.8 percent in November. This was the highest level since March 2008 for the manufacturing sector.
Durable and nondurable goods production were both higher in November, up 0.8 percent and 0.5 percent, respectively. The strongest increase in output was seen in motor vehicles and parts production, which rose 3.4 percent for the month. Other sectors with stronger production in November included wood products (up 3.1 percent), textile and product mills (up 1.7 percent), nonmetallic mineral products (up 1.3 percent), fabricated metal products (1.0 percent), chemicals (up 0.9 percent), electrical equipment and appliances (up 0.9 percent), furniture and related products (up 0.9 percent), and petroleum and coal products (up 0.9 percent), among others.
There were also six manufacturing sectors that had declining output for the month. These segments were apparel and leather (down 0.4 percent), aerospace and other miscellaneous transportation (down 0.2 percent), computer and electronic products (down 0.2 percent), primary metals (down 0.2 percent), and printing and support (down 0.1 percent).
The overall industrial production data also grew strongly, up 1.1 percent in November. This was much stronger than the 0.1 percent increase in October, and it was slightly higher than consensus expectations. The higher figure was boosted by sharp gains in mining and utility production, up 1.7 percent and 3.9 percent, respectively.
The bottom line in this data is that the manufacturing sector appears to be picking up some steam as we end 2013, a trend that we have observed since the beginning of the third quarter. Given the softness in production demand that we saw over much of the past year, the news of accelerated output is entirely welcome. Most importantly, manufacturers continue to be cautiously optimistic about 2014.
With that said, there is also some tentativeness in the marketplace. After all, we have begun each of the past few years with the belief that the sector was finally beginning to get some traction, only to be let down. Policymakers need to harness the momentum of these gains by pursuing pro-growth measures and policies that will allow manufacturers to continue to expand and compete globally.
Chad Moutray is the chief economist, National Association of Manufacturers.