Industrial Production Declines

Date: December 17, 2015

November Production Sees Biggest Decline In Sixth Months

The latest Federal Reserve data on Industrial Production and Capacity Utilization indicated that industrial production fell 0.6 percent in November, the largest decline in six months. Economists had expected a 0.2 percent decline, the Wall Street Journal reported on its website. Manufacturing output was unchanged as drops in production of automobiles, appliances, and electrical equipment were offset by increased production in food and other nondurable goods. Meanwhile, utility output fell 4.3 percent on unseasonably warm weather and mining production fell 1.1 percent as the oil and gas industry continues to retrench. Capacity utilization, a measure of industrial slack, fell from 77.5 percent in October to 77 percent in November. The AP said industrial output “fell for the third straight month in November, another sign that American manufacturers are under stress.” The article said overseas economic weakness and the strong dollar continue to be a drag on industry. Bloomberg News reported that US manufacturing “stagnated in November, held back by less production of durable goods such as automobiles and metals that reflects weak global demand.” Aneta Markowska, chief US economist at Societe Generale, said manufacturing is “the weakest sector of the economy right now – it’s getting hit by the strong dollar, lower energy prices, and now by the weather.” Specifically, production of durable goods fell 0.2% in November, autos and auto parts production dropped 1%, and primary metals fell 2.8%.

What This Means For Small Businesses

The latest data indicate that while some areas of the US economy are showing improvements, growth in the manufacturing sector continues to be sluggish and uneven. In the latest NFIB report on Small Business Economic Trends, NFIB Chief Economist William Dunkelberg said, “Overall, the outlook remains the same with a slow 2 percent-ish growth and there is still not much pressure on prices from Main Street. All we can do at this point is hope for a more business friendly New Year.”

Additional Reading

Reuters also covered the latest Fed data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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