Industrial production jumped 1.1% in November, the greatest gain in 12 months, the Fed says.
Consensus was for an increase 0f 0.6%. October was revised to 0.1%. The November reading is up 3.2% year-over-year.
All subsectors save one saw increases, led by the utilities industry at 3.9% month-over-month.
Capacity utilization also climbed to 79%, versus consensus of 78.4%, and revised 78.2% prior.
We’ve been on a mostly upward trend since reaching a post-recession low in May.
Capital Economics’ Paul Dales commented:
“The 1.1% m/m increase in November took the level of US industrial production back above the pre-recession peak for the first time and provides more evidence that economic growth is gaining momentum.
“Some of the rise was due to a 1.7% m/m gain in mining output, which won’t be repeated as it was a result of oil and gas rigs in the Gulf of Mexico reopening after tropical storm Karen. The surge in utilities output, of 3.4% m/m in November, will probably continue into this month as the fall in temperature further below seasonal norms boosts heating demand.
“The 0.6% m/m rise in manufacturing output is the best guide to the underlying trend, and it suggests that producers are benefitting from stronger demand both at home and overseas. After not rising at all over the summer, output is now increasing at a 3m/3m annualised rate of 3.1%. Some of the survey evidence (such as the ISM and Markit indices) suggests that growth will soon accelerate further. Wednesday’s Fed policy decision remains a close call, but at the margin these data support our view that it is most likely that the Fed will announce the start of tapering.
The industrial sector accounts for less than 20% of GDP, yet creates much of the cyclical variability in the economy.