In November, industrial production showed signs of improvement, rising by 0.2% after a major auto strike came to an end. However, this growth was not evenly distributed across all manufacturers.
Before the release of the data, economists surveyed by the Wall Street Journal had predicted a 0.3% increase in production, making the actual figure slightly lower than expectations.
One of the main drivers behind the rebound was the 7.1% jump in auto output, which had previously plummeted due to the United Auto Workers strike. However, when excluding the auto sector, manufacturing production actually fell by 0.2%.
The Federal Reserve also reported that capacity utilization edged up by 0.1 points to reach 78.8%. Although this is a positive development, it still falls 1 point below the historic average.
On a more positive note, defense orders continued to rise, increasing by 1.2% for the 11th consecutive month.
Looking at the broader picture, the industrial sector has been facing challenges throughout the past year. Factors such as higher interest rates and a shift in consumer spending towards services have resulted in reduced demand for big-ticket items. For heavy industry to significantly improve, interest rates will need to decrease and the overall economy must regain momentum. However, this may take some time.
In terms of market reaction, the Dow Jones industrial average (DJIA) and S&P 500 (SPX) were expected to open slightly higher on Friday. The yield on the U.S. 10-year note also saw a small uptick to 3.93%.
In conclusion, while industrial production has shown signs of a rebound, there are still challenges to overcome. Continued growth will depend on factors such as interest rates and overall economic performance.