Industrial production declined 0.1% in December 2014 following November’s 1.3% advance. Due to warmer temperatures, demand for heating was greatly reduced, evidenced by utilities output dropping 7.3%. Excluding utilities output, industrial production increased 0.7%. Manufacturing output edged up 0.3% in December, marking a fourth consecutive monthly gain, while mining production reversed its downward trend and improved 2.2%. Total capacity utilization for the industrial sector decreased 0.3 ppts to 79.7% in December, which is 0.4% below its 1972 to 2013 average but 1.2% above the same period in the prior year.
The Purchasing Manager Index (PMI) for December 2014 decreased 3.2 ppts to 55.5%, with readings above 50 signifying expansion in the manufacturing industry. Participants’ outlooks regarding business conditions are mixed, as the falling price of crude oil is beneficial to some sectors while detrimental to others. On the West Coast, congested ports, due to the longshoremen work slowdown, continue to impact logistics for importers and exporters. The December PMI reflects expansion in 11 of 18 manufacturing industries including primary metals; fabricated metal products; electrical equipment, appliances & components; petroleum & coal products; miscellaneous manufacturing; and transportation equipment.
The Consumer Confidence Index rebounded 1.6 ppts in December 2014 to 92.6 after November’s decline. Consumers’ attitudes on the labor market as well as overall current economic conditions improved considerably. Those expecting income raises have edged down, although fewer consumers are anticipating earnings reductions.
New orders for manufactured durable goods down three of the last four months, decreased 0.9% or $2.3 billion in November 2014 to $241.6 billion. New orders for commercial aircraft and other transportation equipment in November declined 1.3% or $1.0 billion, to a total of $75.5 billion. Shipments of manufactured durable goods in November dipped 0.6% or $1.6 billion, to $244.5 billion.
Per the third estimate, real Gross Domestic Product (GDP) increased at an annual rate of 5.0% in Q3 2014, compared to the 4.6% growth in Q2 2014. Q3 2014 gains were attributed to improvements in personal consumption expenditures, nonresidential/residential fixed investments, exports and federal and state government spending as well as lower imports.
In December 2014, the chemical and allied products PPI decreased to 276.3 from November’s reading of 280.3.