Industrial production in the U.S. decreased by much more than expected in the month of December, according to a report released by the Federal Reserve on Wednesday.
The Fed said industrial production slid by 0.7 percent in December after falling by a revised 0.6 percent in November. Economists had expected industrial production to edge down by 0.1 percent compared to the 0.2 percent dip originally reported for the previous month.
The bigger than expected decline in industrial production partly reflected a continued slump in manufacturing output, which plunged by 1.3 percent in December after tumbling by 1.1 percent in November.
Mining output also showed a continued decrease, falling by 0.9 percent in December after slumping by 1.2 percent in the previous month.
On the other hand, the report said utilities output surged by 3.8 percent in December after spiking by 4.5 percent in November, as cold temperatures boosted the demand for heating.
“With China emerging more rapidly from its covid restrictions that we had originally expected, it’s possible that U.S. manufacturing will receive some boost later this year,” said Paul Ashworth, Chief North America Economist at Capital Economics.
He added, “But, for now, the outlook remains grim, as the lagged impact of higher interest rates is choking off demand.”
The Fed also said capacity utilization in the industrial sector fell to 78.8 percent in December from a revised 79.4 percent in November.
Economists had expected capacity utilization to edge down to 79.6 percent from the 79.7 percent originally reported for the previous month.
Capacity utilization in the manufacturing and mining sectors decreased to 77.5 percent and 87.7 percent, respectively, while capacity utilization in the utilities sector climbed to 76.8 percent.
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