Cold Weather Lifts IP, but Moderation Ahead

Wells Fargo Research Team Wells Fargo

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

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.
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

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.
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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Wells Fargo Research Team

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