Manufacturing production rose 0.9% last month after advancing 0.8% in November, the Federal Reserve said on Friday. That was the eighth straight monthly gain in factory production. Manufacturing is being supported by a shift in demand towards goods from services.
Economists polled by Reuters had forecast manufacturing output rising 0.5% in December. A survey last this month showed suppliers struggling to deliver materials to manufacturers, labor and transportation constraints because of the coronavirus.
Motor vehicles and parts output declined 1.6% in December. Excluding autos, manufacturing output increased 1.1%.
Production at factories increased at a 11.2% annualized rate in the fourth quarter.
The strength in manufacturing output combined with a 6.2% surge utilities and 1.6% jump in mining to boost industrial production by 1.6% in December. That followed a 0.5% gain in November. Industrial production increased at a 8.4% rate in the fourth quarter.
Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, rose 0.7 percentage points to 73.4% in December. Overall capacity use for the industrial sector increased 1.1 percentage points to 74.5%. It is 5.3 percentage points below its 1972-2019 average.
Officials at the Fed tend to look at capacity use measures for signals of how much "slack" remains in the economy -- how far growth has room to run before it becomes inflationary.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
