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Industrial Production Up 0.4% in December

Industrial production increased 0.4 percent in December after having fallen 0.3 percent in November. For the fourth quarter as a whole, industrial production rose at an annual rate of 3.1 percent, its 10th consecutive quarterly gain. The capacity utilization rate for total industry rose to 78.1 percent, a rate 2.3 percentage points below its long-run (1972-2010) average.

"The December industrial production report is an encouraging end to the year as the U.S. outlook is racked with uncertainty," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). "Europe, a major export market, has likely slipped into another recession and there is much uncertainty concerning the possibility of contagion from the European banks, risks of public policy mistakes, and a crisis of confidence here in the United States."

In the manufacturing sector, output advanced 0.9 percent in December with similarly sized gains for both durables and nondurables. The output of utilities fell 2.7 percent, as unseasonably warm weather reduced the demand for heating; the output of mines moved up 0.3 percent. At 95.3 percent of its 2007 average, total industrial production in December was 2.9 percent above its level of a year earlier.

Manufacturing production climbed 0.9 percent in December to a level 3.7 percent above that of 12 months earlier; gains in December were widespread among the major industry groups. The factory operating rate moved up 0.6 percentage point to 75.9 percent, but it was still 3.1 percentage points below its long-run average of 79.0 percent. For the fourth quarter, manufacturing production increased at an annual rate of 3.9 percent.

The output of durable goods rose 0.9 percent in December. The indexes for wood products, primary metals, and machinery registered gains of more than 2 percent; the only major industries that recorded substantial decreases were nonmetallic mineral products, aerospace and miscellaneous transportation equipment, and furniture. For the fourth quarter, the output of durables moved up at an annual rate of 6.3 percent, with gains of nearly 10 percent or more in wood products; primary metals; electrical equipment, appliances, and components; motor vehicles and parts; and aerospace and miscellaneous transportation equipment.

The production of nondurable goods advanced 0.8 percent in December. The indexes for textile and product mills, for petroleum and coal products, for chemicals, and for plastics and rubber products all gained 1.0 percent or more, while the indexes both for paper and for apparel and leather fell. The output of nondurables increased at an annual rate of 1.5 percent in the fourth quarter. The index for other manufacturing (non-NAICS), which consists of publishing and logging, jumped 2.3 percent in December after having dropped 1.9 percent in November.

In December, the output of mines moved up 0.3 percent, and the capacity utilization rate for mining rose to 92.8 percent, a level 5.4 percentage points above its long-run average. The output of mines advanced at an annual rate of 10.4 percent in the fourth quarter, its third consecutive quarter of strong growth. In December, the output index for natural gas utilities dropped 8.5 percent and the index for electric utilities decreased 1.7 percent, as temperatures for the month moved well above seasonal norms. The operating rate for utilities was 76.8 percent, a level 9.8 percentage points below its long-run average.

In December, capacity utilization rates at industries grouped by stage of process were as follows: For the crude stage, the operating rate edged up 0.2 percentage point to 90.4 percent, a rate that was 4.0 percentage points above its long-run average; for the primary and semifinished stages, utilization increased 0.3 percentage point to 74.8 percent, a rate 6.5 percentage points below its long-run average; and for the finished stage, the operating rate increased 0.3 percentage point to 76.9 percent, a rate 0.4 percentage point below its long-run average.

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