Production at U.S. manufacturers increased in December by more than projected, marking an eighth-consecutive month of gains as steady yet more moderate demand growth and lean inventories continue to power the sector’s recovery.
Output at factories rose 0.9% from the previous month after a 0.8% gain in November, Federal Reserve data showed Friday. Total industrial production, which also includes mines and utilities, jumped 1.6% in December, the most in five months, after an upwardly revised 0.5% gain.
The median estimate in a Bloomberg survey of economists called for 0.5% gains in both manufacturing output and industrial production.
An annualized 11.2% increase in fourth-quarter manufacturing production shows factory activity continues to steadily rebound. A slowly improving economy, still-lean inventories and prospects for stronger growth this year should continue to support the industry this year after the pandemic caused factory output to decline 6.9% for all of 2020.
Still, hurdles remain, including labor constraints at factories and surging COVID-19 infections that could limit the pace of recovery.
A separate Commerce Department report released Friday showed disappointing retail sales for December.
Other manufacturing measures point to resilience in the sector. The Institute for Supply Management’s measure of factory activity expanded in December at the fastest pace in more than two years, bolstered by an acceleration in new orders and the strongest production growth since 2011.
Meanwhile, beneath the hood of a disappointing December jobs report, manufacturing payrolls increased by a solid 38,000.
The gain in factory output was broad, reflecting improvement in production of consumer goods, business equipment and construction supplies.Manufacturing capacity utilization rose to 73.4% from 72.7%.Total industrial capacity utilization, including factories, mines and utilities, increased to 74.5% from 73.4%. The industrial plant-use rate has improved but remains below the 76.9% seen last February.Production of motor vehicles and parts fell 1.6% in December. Factory output excluding auto production increased 1.1%.Utility output climbed 6.2%. Mining output rose 1.6%.