Industrial production rose for a fifth month in December, capping the strongest quarter since 2010 and indicating manufacturing is helping propel the U.S. economy.
Output at factories, mines and utilities climbed 0.3% after a revised 1% increase in November, figures from the Federal Reserve showed today in Washington. The gain matched the median forecast of economists in a Bloomberg survey. Manufacturing production rose more than projected.
Industrial output rose at a 6.8% annual rate in the final three months of last year, the most since the second quarter of 2010. Manufacturing will be a source of strength for the economy as factory floors stay busy filling orders for home-construction materials, appliances and automobiles, while overseas markets expand.
“Production should continue to stay fairly strong, there’s been little to suggest otherwise” Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York, said before the report. “Autos will be a big component. What we see now in the consumer sector is recovering labor markets and a general increase in credit flows have helped consumers buy more autos.”
Another report today showed the pace of home construction dropped less than forecast, ending the best year for the industry since 2007. Housing starts fell to a 999,000 million annualized rate in December from a 1.11 million pace that was the highest since November 2007, according to the Commerce Department in Washington.
Estimates of the 84 economists surveyed for industrial production ranged from a drop of 0.2% to a 0.7% advance after a previously reported 1.1% gain in November.
Manufacturing, which makes up 75% of total production, advanced 0.4% in December after a 0.6% gain. Economists projected a 0.3% increase last month, according to the Bloomberg survey median. Factories output of autos, appliances, furniture, home electronics and clothing increased last month.
Utility output dropped 1.4% after a 3% surge in November. Mining production, which includes oil drilling, increased 0.8%.
The pullback in utility use followed a surge in November, when temperatures cooled to an average 41.6 degrees Fahrenheit (5.3 degrees Celsius), compared with 53.6 degrees in October, according to the National Oceanic and Atmospheric Administration. Temperature-related energy demand in the contiguous U.S. was 30% above average, the agency said. In December it was 15% above average.