U.S. Manufacturing Output Surges in December

WASHINGTON (Reuters) – U.S. manufacturing output surged in December likely due to increased production at Boeing (NYSE:BA) after 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, according to the Federal Reserve on Friday. Economists polled by Reuters had forecast production rising 0.2% after a previously reported 0.2% gain.

Production at factories was unchanged year-on-year in December. However, it fell at a 1.2% annualized rate in the fourth quarter following a 0.8% contraction in the July-September quarter. Manufacturing, which comprises 10.3% of the economy, has largely stabilized in recent months due to the U.S. central bank cutting interest rates.

The Institute for Supply Management’s Purchasing Managers Index rose to a nine-month high in December. However, broad tariffs on imported goods planned by President-elect Donald Trump’s incoming administration could raise raw material costs, undermining any potential recovery.

Production of aerospace and miscellaneous transportation equipment surged 6.3%. The Boeing strike, which ended in November, had negatively impacted manufacturing production in September and October.

Motor vehicle and parts output fell 0.6% last month. Durable manufacturing production rose 0.4%, 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 amidst freezing temperatures, following a 0.7% drop in November.

Industrial production accelerated 0.9% last month, with aircraft and parts output contributing 0.2 percentage points, 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, following a 0.6% contraction in the July-September quarter.

Capacity utilization for the industrial sector, a measure of how fully firms are utilizing their resources, rose to 77.6% from 77.0% in November, but is still 2.1 percentage points below its 1972–2023 average. The operating rate for the manufacturing sector picked up 0.4 percentage points in December to 76.6%, which is 1.7 percentage points below its long-run average.