January 17, 2025
Industrial production jumped 0.9% in December after having risen 0.2% in November. The Fed reported that gains in the output of aircraft and parts contributed 0.2% to total IP growth in December following the resolution of the Boeing strike. In the past year total industrial production has risen 0.5%.
Breaking industrial production down into its three basic categories — manufacturing, mining, and utilities. Manufacturing production rose 0.6% in December after climbing 0.4% in November. In the past year manufacturing output has been unchanged.
In the motor vehicle sector production declined 0.,6% in December after having risen 3.5% in November. In the past year motor vehicle production has fallen 5.7%. However, this component is extremely volatile from month to month.
Excluding the motor vehicle sector, manufacturing output rose 0.7% in December after having risen 0.2% in November. In the past year it has risen 0.5%.
High tech production rose 1.1% in December after having been unchanged in November High tech production has risen 7.9% in the past year. We would suggest that if firms are unable to find an adequate supply of workers, they will turn to technology in an effort to boost production and satisfy the demand for their products. At the same time firms are all experimenting with AI in an effort to figure out how it might help them boost productivity. Thus, we expect high tech production to continue to climb rapidly in the months ahead.
Mining (14%) output jumped 1.8% in December after declining 0.5% in November. Mining has risen 0.3% in the past year.
Utilities output rose 2.1% in December after having declined 0.7% in November. Over the past year utility output has risen 4.3%. This component is extremely volatile from month-to-month as the weather fluctuates.
Capacity utilization in the manufacturing sector rose 0.4% in December to 76.6% after having risen 0.2% in November. The utilization rate is currently a bit below the 77.4% level that is generally regarded as effective full capacity utilization.
We expect GDP to be 2.5% in the fourth quarter and 2.9% in 2025.
Stephen Slifer
NumberNomics
Charleston, SC
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