Manufacturing surge pushes U.S. industrial production up 0.3%

U.S. industrial production increased 0.3% in December, led by the biggest surge in manufacturing in 10 months.

The Federal Reserve said Friday that manufacturing output jumped 1.1% last month, the largest gain since February 2018. Automakers drove much of the growth with a 4.7% jump in production.

Utility output slumped 6.3% amid an unseasonably warm December. Mining output rose 1.5% on increased extraction of oil and natural gas.

Overall industrial production is up 4% from a year ago.

“This was a solid report and a good finish to 2018,” said Jennifer Lee, senior economist at BMO Capital Markets.

In emailed commentary, CIBC chief economist Avery Shenfeld said the report “reinforces our view that the U.S. economy isn’t at the precipice of recession as some have argued.”

However, Shenfeld also said the jump in auto production likely won’t continue give an overall flat trend in U.S. car sales.

Capacity utilization at factories increased 0.7 points to 76.5%, a solid increase though that’s two points below the long-term average. Still, it’s a sign that companies might need to invest more in equipment and facilities.

Manufacturers have benefited from a relatively healthy economy, despite concerns about a global slowdown, a trade war between the United States and China, and the waning stimulus from President Donald Trump’s tax cuts.

Auto sales improved 0.3% in 2018 to 17.27 million vehicles sold.

Yet there are also signs that manufacturers might struggle to keep expanding.

The Institute for Supply Management, an association of purchasing managers, said earlier this month that U.S. factories expanded at the weakest pace since November 2016. The survey-based index fell to 54.1 in December, a decline from 59.3 in November. Still, any reading above 50 points to continued growth.

Staff, with files from The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City.