Industrial Production Surges Due To Cold Weather Boost For Utility Demand
Stocks are un-surging on the "good" news in the headline beats for Industrial Production (biggest jump and biggest beat in 13 months) and Capacity Utilization (best since June 08). However, as is always the case, the underlying data hides some less than positive signs. The bulk of the gains in production were from Utilities (+3.9%) as colder-than-expected temperatures boosted demand (the same temps that retailers are crying about). Manufacturing output remains 3.6% below its pre-recession peak (though gains were broad-based).
Note the last spike of this magnitude was around the time of Sandy - and was entirely unsustainable...
From the report:
Industrial production increased 1.1 percent in November after having edged up 0.1 percent in October; output was previously reported to have declined 0.1 percent in October. The gain in November was the largest since November 2012, when production rose 1.3 percent. Manufacturing output increased 0.6 percent in November for its fourth consecutive monthly gain. Production at mines advanced 1.7 percent to more than reverse a decline of 1.5 percent in October. The index for utilities was up 3.9 percent in November, as colder-than-average temperatures boosted demand for heating. At 101.3 percent of its 2007 average, total industrial production was 3.2 percent above its year-earlier level. In November, industrial production surpassed for the first time its pre-recession peak of December 2007 and was 21 percent above its trough of June 2009.
Capacity utilization for the industrial sector increased 0.8 percentage point in November to 79.0 percent, a rate 1.2 percentage points below its long-run (1972-2012) average.
The production of consumer goods increased 1.5 percent in November and stood 2.7 percent above its level of a year earlier. The output of durable consumer goods rose 2.2 percent, and all of its major components registered gains of 1.0 percent or more. The largest increases were in the production of automotive products, which rose 3.3 percent, and in the production of home electronics, which moved up 2.6 percent. The production of consumer nondurables rose 1.3 percent. The rise was supported by strong gains in chemical products and especially in consumer energy products. After three consecutive months of gains, the output of business equipment fell 0.5 percent in November. The indexes for information processing equipment and for industrial and other equipment declined 1.8 percent and 0.6 percent, respectively, while the production of transit equipment increased 1.0 percent. Despite its decrease in November, the index for business equipment was 2.2 percent above its year-earlier level.
The output of defense and space equipment declined 0.8 percent in November following three months of gains. The index for November was 1.4 percent above its year-earlier level.
Among nonindustrial supplies, construction supplies moved up 0.6 percent in November to record its sixth consecutive monthly increase; the index was 4.9 percent above its level of a year earlier. The output of business supplies advanced 1.0 percent in November, its fifth consecutive increase, and has gained 3.1 percent during the past 12 months.
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Manufacturing output rose 0.6 percent in November to a level that was 2.9 percent above a year earlier but 3.6 percent below its pre-recession peak; gains were widespread across industries. The factory operating rate rose 0.4 percentage point to 76.8 percent, a rate 1.9 percentage points below its long-run average.
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