Unexpected weakness in US industrial production as business equipment output falls

According to the Department of Commerce, in seasonally adjusted terms total industrial production dropped in December at a month-on-month pace of 0.7% (consensus: -0.1%).

That was on top of a downwards revision to the prior month's reading from -0.2% to -0.6%.

Manufacturing output accounted for the bulk of the downdraft, falling by 1.3% versus the prior month while in November it had dropped by 1.1%.

Mining output softened again alongside, shrinking by 0.9%, while that of utilities increased by 3.8%.

By major market groups, production of final products retreated by 0.5% with a 2.0% decline in that of business equipment contracting by 2.0% after a 1.8% fall in November.

Output of non-industrial supplies also weakened and was down by 1.3% on the month while that of Materials rose by 0.7%.

Capacity utilisation in industry meanwhile fell back from 79.4% in November to 78.8% for December (consensus: 79.6%).

"The real shock in this report is the far bigger-than-expected plunge in manufacturing output, the second straight monthly decline and the largest since February 2021," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"The good news - relatively - is that survey-based measures of capex intentions appear to be bottoming out, but the data are not yet definitive. In any event, a sustained rebound still looks to be months away, and in the meantime manufacturing output likely has further to fall, though not at December’s alarming pace."

-- More to follow --