US manufacturing output rises unexpectedly

[WASHINGTON] US manufacturing output rose unexpectedly in December as a drop in motor vehicle output was outpaced by increases in production of other durable goods, food and beverages, and other products.

The Federal Reserve said on Friday that manufacturing production rose 0.2 per cent last month after a downwardly revised 1.0 per cent increase in November. Overall industrial output fell 0.3 per cent in December after a downwardly revised increase of 0.8 per cent in November.

The drop in overall industrial output was driven by a 5.6 per cent decline among utilities, as demand for heating fell during an unseasonably warm December.

Excluding motor vehicles and parts, industrial production in December was unchanged, and manufacturing rose 0.5 per cent.

Economists polled by Reuters had forecast both overall industrial output and manufacturing output would fall 0.2 per cent in December. On an annualised basis production at factories fell 1.3 per cent from Dec 2018 to Dec 2019.

The Fed's measure of the industrial sector comprises manufacturing, mining, and electric and gas utilities.

There was a 4.6 per cent fall in the production of motor vehicles and parts in December. Manufacturing output of food, beverage and tobacco products rose 1.3 per cent, nonmetallic mineral products rose 2.3 per cent, primary metals output rose 1.3 per cent, and computer and electronics products rose 1.4 per cent.

The manufacturing sector, which makes up about 11 per cent of the US economy, has been weakened by a 18-month-long trade war between the United States and China. The two countries signed a preliminary trade deal on Wednesday.

With overall industrial output falling, capacity utilisation, a measure of how fully firms are using their resources, fell 0.4 percentage point to 77 per cent in December from an upwardly revised 77.4 per cent in November.

However that was influenced by the decline in utilities output. Utilisation at factories nudged higher, to 75.2 per cent compared to 75.1 per cent in November. 

REUTERS