The 2020 Mid-Year Economic Update_long

Industrial Production Up 1.6% in December

According to the Industrial Production and Capacity Utilization Report, manufacturing output increased 0.9% during the month; year-to-date industrial production has improved but is still 3.6% below its pre-pandemic level.
Industrial Production December 2020

Total industrial production grew 1.6% in December, according to the Industrial Production and Capacity Utilization Report, released Friday by the Federal Reserve. The index has recovered much of its 16.5% decline from February to April, but output in December was still 3.5% lower than its pre-pandemic February level.

For the fourth quarter as a whole, total industrial production rose at an annual rate of 8.4%. At 105.7% of its 2012 average, total industrial production in December was 3.6% lower than it was a year earlier and 3.3% below its pre-pandemic February reading. Capacity utilization for the industrial sector rose 1.1% in December to 74.5%, a rate that is 5.3% below its long-run (1972–2019) average.

Gains were widespread among the market groups in December. Both energy materials and consumer energy products recorded large increases because of the jump in utilities; a further rebound in the oil and natural gas sector also contributed to the strength in energy materials. Despite the gains in December, the indexes for most major market groups, other than durable consumer goods and defense and space equipment, remained below their year-earlier levels.

Manufacturing output advanced 0.9% in December for its eighth consecutive monthly gain. For the fourth quarter, manufacturing production rose at an annual rate of 11.2%. The index for motor vehicles and parts declined 1.6% in December but was nevertheless 3.6% higher than its year-earlier level. Excluding the motor vehicle sector, factory output moved up 1.1% as most manufacturing industries posted gains. The production of durable goods other than motor vehicles and parts rose 1.5%, and nondurable goods production increased 0.9%. Within durables, primary metals posted its seventh consecutive monthly increase. Within nondurables, plastics and rubber products posted the largest gain (3.2%), while printing and support recorded the only decrease (1.4%). The output of other manufacturing (publishing and logging) decreased 0.6%.

The index for mining increased 1.6% in December, as continued gains in the oil and gas sector (both extraction and drilling) outweighed declines elsewhere; even so, the index was still 12.3% below its level of a year earlier. For the fourth quarter, mining output rose 3.7% at an annual rate.

Capacity utilization for manufacturing increased 0.7% in December to 73.4%, 13.3% higher than its trough in April but still 4.8% below its long-run average. The operating rates for mining and utilities increased to 80.5% and 74.5%, respectively, but both remained well below their long-run averages.

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