| Industrial Production |
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Released On 12/15/2011 9:15:00 AM For Nov, 2011
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Prior | Consensus | Consensus Range | Actual |
| Production - M/M change | 0.7 % | 0.2 % | -0.2 % to 0.5 % | -0.2 % | | Capacity Utilization Rate - Level | 77.8 % | 77.8 % | 77.5 % to 78.1 % | 77.8 % |
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Highlights
Industrial production weakened in November-largely on a decline in auto assemblies although manufacturing was down in general. Industrial production declined 0.2 percent after surging 0.7 percent in October. November's figure was significantly below consensus expectations for a 0.2 percent increase. By major components, manufacturing dropped 0.4 percent after gaining 0.5 percent the prior month. For November, utilities output advanced 0.2 percent while mining edged up 0.1 percent.
Manufacturing was pulled down largely by a 3.4 percent drop in output for motor vehicles and parts, following a 3.4 percent jump in October. Excluding autos, manufacturing still slipped 0.2 percent, following a 0.3 percent rise the prior month.
On a seasonally adjusted year-on-year basis, overall industrial production was up 3.7 percent in November, compared to 4.3 percent the month before.
Overall capacity utilization eased to 77.8 percent from the recovery's high of 78.0 percent in October. Analysts had called for 77.8 percent for November.
Although November's manufacturing number is disappointing, it may be temporary as this morning's release for Empire State manufacturing showed an unexpectedly strong number for December. More data on manufacturing will be posted at 10:00 a.m. ET for Philly Fed manufacturing for December.
The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.
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Market Consensus before announcement
Industrial production surged a convincing 0.7 percent in October, following a 0.1 percent dip the prior month. The latest boost reflected a very strong 0.5 percent rise in manufacturing output and a 2.3 percent rebound in mining output. Within the manufacturing component, gains were led by a 3.1 percent surge in autos as the rebound from prior Japan-supply dislocations appears to be hitting a peak. Excluding autos, manufacturing still posted a second-straight and respectable 0.3 percent gain. Capacity utilization jumped five-tenths to 77.8 percent which is the highest reading of the recovery. Looking ahead to November, the manufacturing component is likely to be weak as aggregate production hours in manufacturing fell 0.5 percent for the month.
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Definition
The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.
Why Investors Care
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![[Chart]](showimage.asp?imageid=21799)
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The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy.
Data Source: Haver Analytics
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![[Chart]](showimage.asp?imageid=21800)
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The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent.
Data Source: Haver Analytics
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