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Industrial Production Increases 0.8% in December

Industrial production increased 0.8 percent in December after having risen 0.3 percent in November. Manufacturing production increased 0.4 percent in December and rose 3.3 percent at an annual rate in the fourth quarter. For the fourth quarter as a whole, industrial production increased at an annual rate of 2.4 percent, a slower pace than in the earlier quarters of the year. In the manufacturing sector, output moved up 0.4 percent in December with gains in both durables and nondurables.

Excluding motor vehicles and parts, factory output increased 0.5 percent. The output of mines advanced 0.4 percent; the output of utilities surged 4.3 percent, as unusually cold weather boosted the demand for heating. At 94.9 percent of its 2007 average, total industrial production in December was 5.9 percent above its level of a year earlier. The capacity utilization rate for total industry rose to 76.0 percent, a rate 4.6 percentage points below its average from 1972 to 2009.

"Industrial production, led by manufacturing and mining, finished the year on a strong note and is poised to sustain growth in 2011," said Thomas J. Duesterberg, Ph.D., president and CEO of the Manufacturers Alliance/MAPI. "Some specific areas to look for improved performance in 2011 are:  aerospace, where production was down by 0.1 percent last year, as new and improved large commercial aircraft models go into full production; the auto sector, where stronger consumer spending, attractive new models and an aging car fleet suggest continued growth; and mining and oil and gas equipment, a sector where global demand is accelerating and the United States has a competitive advantage."

The production index for construction supplies decreased 0.8 percent in December but rose at an annual rate of 4.6 percent in the fourth quarter. The output of business supplies increased 0.5 percent in December but was down for the quarter as a whole.

Manufacturing production increased 0.4 percent in December and rose 3.3 percent at an annual rate in the fourth quarter. The factory operating rate moved up to 73.2 percent in December, but it was still 6.0 percentage points below its long-run (1972 to 2009) average of 79.2 percent.

In December, capacity utilization rates at industries grouped by stage of process were as follows: For the crude stage, the operating rate increased 0.5 percentage point, to 89.0 percent, a rate that was 2.5 percentage points above its average from 1972 to 2009; for the primary and semifinished stages, utilization moved up 1.1 percentage points, to 73.2 percent, a rate 8.4 percentage points below its long-run average; and for the finished stage, utilization edged up 0.1 percentage point, to 74.3 percent, a rate 3.2 percentage points below its long-run average.

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