WASHINGTON (Reuters) – U.S. manufacturing output rose sharply in December, likely after production at Boeing increased following the end of a crippling strike by factory workers at the aerospace giant.
Factory output rose 0.6% last month, following an upwardly revised recovery of 0.4% in November, the Federal Reserve said Friday. Economists polled by Reuters had forecast output would rise 0.2%, after a previously reported increase of 0.2%.
Factory production remained unchanged year-on-year in December. In the fourth quarter, the economy fell by 1.2% year on year, after shrinking by 0.8% in the July-September quarter. The manufacturing sector, which accounts for 10.3% of the economy, has largely stabilized in recent months after the US central bank began cutting interest rates.
The Institute for Supply Management’s Purchasing Managers Index rose to a nine-month high in December. But broad tariffs on imported goods planned by the incoming administration of President-elect Donald Trump could raise the cost of raw materials and undermine any recovery.
Production of aerospace and various transportation equipment increased by 6.3%. The strike by Boeing factory workers, which ended in November, had depressed overall manufacturing output in September and October.
Production of motor vehicles and parts fell by 0.6% last month. Sustainable manufacturing production increased by 0.4%, partly due to a 1.7% increase in primary metal production. Non-durable manufacturing output rose 0.7%, despite broad gains.
Mining production rose 1.8%, after a 0.5% decline in November.
Utilities production rose 2.1%, driven by a 6.2% increase in natural gas production in subzero temperatures. That followed a decline of 0.7% in November.
Industrial production accelerated 0.9% last month, with aircraft and parts production contributing 0.2 percentage points, after rising 0.2% in November. The economy rose 0.5% year on year in December and contracted 0.8% in the fourth quarter, after contracting 0.6% in the July-September quarter.
Capacity utilization for the industrial sector, a measure of how fully companies are using their resources, rose to 77.6% from 77.0% in November. It is 2.1 percentage points below the 1972–2023 average. The manufacturing sector’s business figure rose 0.4 percentage points to 76.6 in December. It is 1.7 percentage points below the long-term average.
(Reporting by Lucia Mutikani)