WASHINGTON (Reuters) - U.S. manufacturing output surged in December likely as production at Boeing (NYSE:BA) picked up following the end of a crippling strike by factory workers at the aerospace giant.
Factory output increased 0.6% last month after an upwardly revised 0.4% rebound in November, the Federal Reserve said on Friday. Economists polled by Reuters had forecast production rising 0.2% after a previously reported 0.2% gain.
Production at factories was unchanged on a year-on-year basis in December. It fell at a 1.2% annualized rate in the fourth quarter after contracting at a 0.8% pace in the July-September quarter. Manufacturing, which accounts for 10.3% of the economy, has largely stabilized in recent months after the U.S. central bank started cutting interest rates.
The Institute for Supply Management's Purchasing Managers Index rose to a nine-month high in December. But broad tariffs on imported goods planned by President-elect Donald Trump's incoming administration could raise the costs of raw materials and undermine any recovery.
Production of aerospace and miscellaneous transportation equipment vaulted 6.3%. The strike by Boeing factory workers, which ended in November, had depressed overall manufacturing production in September and October.
Motor vehicle and parts output fell 0.6% last month. Durable manufacturing production rose 0.4%, also lifted by a 1.7% increase in primary metals output. Nondurable manufacturing output rose 0.7% amid broad gains.
Mining output advanced 1.8% after falling 0.5% in November.
Utilities production rose 2.1%, driven by a 6.2% increase in natural gas output amid freezing temperatures. That followed a 0.7% drop in November.
Industrial production accelerated 0.9% last month, with aircraft and parts output contributing 0.2 percentage point, after rising 0.2% in November. It increased 0.5% year-on-year in December and contracted at a 0.8% rate in the fourth quarter after shrinking at a 0.6% pace in the July-September quarter.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, rose to 77.6% from 77.0% in November. It is 2.1 percentage points below its 1972–2023 average. The operating rate for the manufacturing sector picked up 0.4 percentage point in December to 76.6. It is 1.7 percentage points below its long-run average.