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Utilities, mining boost US industrial production
[WASHINGTON] US industrial production increased more than expected in December as unseasonably cold weather toward the end of the month boosted demand for heating, but manufacturing output slowed further.
The Federal Reserve said on Wednesday industrial output surged 0.9 per cent last month also buoyed by robust gains in mining production after a downwardly revised 0.1 per cent decline in November.
Economists polled by Reuters had forecast industrial production advancing 0.4 per cent last month after a previously reported 0.2 per cent increase in November. Industrial production rose at an annual rate of 8.2 per cent in the fourth quarter, the biggest gain since the second quarter of 2010.
For all of 2017, industrial output rose 1.8 per cent, the first and largest increase since 2014.
The industrial sector is being supported by a strengthening global economy and a weakening dollar, which is helping to make US exports more competitive relative to those of the nation's main trading partners. A survey early this month showed an acceleration in factory activity in December, with a measure of new orders recording its best reading since January 2004.
Mining production increased 1.6 per cent amid a rebound in oil and gas well drilling. Utilities production accelerated 5.6 per cent last month after declining 3.1 per cent in November.
Bitter cold gripped a large part of the country at the end of December. The surge in utilities demand bodes well for consumer spending in the fourth quarter.
But manufacturing output gained only 0.1 per cent in December, putting a wrinkle on the report, after rising 0.3 per cent in the prior month. Manufacturing production jumped 1.5 per cent in October.
Manufacturing output was last month held back by a 1.5 per cent drop in the production of primary metals. Motor vehicle and parts production increased 2.0 per cent. Manufacturing production rose at a 7.0 per cent rate in the fourth quarter.
With output accelerating last month, capacity utilization a measure of how fully industries are deploying their resources increased to 77.9 per cent from 77.2 per cent in November. Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.