Factory Production Stagnates on Less Output of Durables
Manufacturing stagnated in November, held back by less production of durable goods such as automobiles and metals that reflects weak global demand.
The unchanged reading in factory output followed a 0.3% October gain that was softer than previously reported, data from the Federal Reserve showed Dec. 16. Warmer weather led to the biggest slump in utility output in more than eight years, pushing down industrial production by the most since March 2012.
Factory production has floundered this year as dollar appreciation and weaker overseas economies damped demand for U.S.-made goods and as oil producers cut back. Stronger home construction and resilient consumer spending are making up for the malaise in manufacturing.
“With oil prices weak, that’s going to adversely affect mining for a while,” David Sloan, a senior economist at 4Cast Inc. in New York, said before the report. “The domestic demand picture is healthy enough, but the exports picture is fairly weak.”
November manufacturing output, which accounts for about 12% of the economy, matched the Bloomberg News survey median. October factory production previously was reported up 0.4%.
Total industrial production dropped 0.6%, weaker than the median forecast of a 0.2% decrease. October was revised to a 0.4% decline from a previously reported 0.2% drop.
Capacity utilization, which measures the amount of a plant that is in use, decreased to a two-year low of 77% in November from 77.5% the prior month.
Warmer-than-usual temperatures in November depressed utility output by 4.3%, the most since March 2007, after a 2.8% drop in October. Thirty-two states in the eastern half of the country posted temperatures that were much warmer than average, according to the National Oceanic and Atmospheric Administration.
Mining production, including oil drilling, declined 1.1% in November after a 2.4% decrease. Oil and gas well drilling dropped 4%.
Factory output of all durable goods decreased 0.2% in November. Motor vehicles and parts production fell 1%, while output of primary metals decreased 2.8%. Factory output excluding autos and parts rose 0.1%.
Dollar appreciation has remained a headwind for U.S. factories as it makes their products more expensive overseas. The trade-weighted dollar rose last week to its highest in more than 12 years.
