Cold Weather Lifts IP, but Moderation Ahead
|Industrial production (IP) rose 0.6% in November, boosted by utilities and mining output. Manufacturing production was flat, however, and we expect further moderation ahead given slower U.S. and global growth.
Utilities & Mining Drive IP
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Industrial production rose 0.6% in November, boosted by a 3.3% jump in utilities as colder-than-usual temperatures gripped much of the country last month.
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Despite a sharp drop in oil prices over the month, mining output was up 1.7%, and contributed 0.3 percentage points to total IP growth. But, after rising 13.2% over the past year, the support from the mining sector is expected to fade in the coming months.
Manufacturing Moderation Ahead
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More telling of recent economic activity was the flat reading in manufacturing production. After declining 0.1% in October, the flat reading in November hints that the robust pace of production this past year is beginning to slow.
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We expect to see continued softening in the pace of manufacturing growth in the coming year, as both U.S. and global growth slow and the dollar remains a headwind for exporters.
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