Manufacturing Sees a Boost as Boeing Production Ramps Up
The US manufacturing sector experienced a significant surge in December, largely attributed to the resumption of production at Boeing following the end of a strike by factory workers. According to the Federal Reserve, factory output increased by 0.6% last month, exceeding economists’ forecasts of a 0.2% rise.
Aerospace and Transportation Lead the Charge
Production of aerospace and miscellaneous transportation equipment saw a remarkable 6.3% increase, largely due to the rebound at Boeing. The strike, which ended in November, had previously depressed overall manufacturing production in September and October.
Mixed Results Across Industries
While motor vehicle and parts output fell by 0.6%, durable manufacturing production rose 0.4%, driven by a 1.7% increase in primary metals output. Nondurable manufacturing output, on the other hand, saw a 0.7% gain, with broad-based increases across various industries.
Mining and Utilities See Significant Gains
Mining output advanced 1.8% last month, recovering from a 0.5% decline in November. Utilities production rose 2.1%, driven by a 6.2% increase in natural gas output, which was likely influenced by freezing temperatures.
Industrial Production Accelerates
Industrial production accelerated 0.9% last month, with aircraft and parts output contributing 0.2 percentage points to the growth. This follows a 0.2% rise in November, and marks a 0.5% year-on-year increase in December.
Capacity Utilization Rises
Capacity utilization for the industrial sector rose to 77.6% from 77.0% in November, indicating that firms are using their resources more efficiently. The operating rate for the manufacturing sector also picked up 0.4 percentage points to 76.6, although it remains 1.7 percentage points below its long-run average.
Outlook Remains Uncertain
While the recent surge in manufacturing output is a positive sign, the industry’s future growth remains uncertain. The incoming administration’s plans for broad tariffs on imported goods could raise the costs of raw materials and undermine any recovery.
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