Production Jump Leaves Year-End Upturn

The 0.8% U.S. December industrial production surge after downward revisions beat estimates of a 0.6% increase, which leaves an upturn into year-end, as the big 9.7% weather-hit to the utility output over the prior three months was sharply reversed with a 6.6% pop, alongside a 1.8% vehicle assembly rate bounce and a 0.7% rise for business equipment output.

There is now a 2.0% net industrial production drop from a cyclical-peak in November of 2014, with declines in 17 of the last 25 months and 7 of the 9 quarters through Q4. Factory output underperformed gross domestic product (GDP) since the November 2014 peak for factory output given a 1.0% average contraction rate for industrial production over the eight quarters ending in Q4 versus a 1.8% average growth rate for GDP. There was a 1.0% contraction rate for industrial production in 2016 alongside a 1.6% growth rate for GDP.