U.S. Manufacturing Production Update

WASHINGTON (Reuters) – U.S. manufacturing production rebounded less than expected in November, as the boost from motor vehicle output was partially offset by ongoing weakness in the aerospace industry despite the end of a significant strike by factory workers at Boeing.

Factory output increased by 0.2% last month following a downwardly revised 0.7% decline in October, according to the Federal Reserve. Economists surveyed by Reuters had anticipated a 0.5% rebound after a previously reported 0.5% decrease.

Production at factories has decreased by 1.0% on a year-on-year basis, with output previously affected by the Boeing strike. Despite its conclusion in early November, production of aerospace and miscellaneous transportation equipment remains subdued.

Manufacturing, which constitutes 10.3% of the economy, continues to struggle following the U.S. central bank's aggressive monetary policy tightening from March 2020 to July 2023. However, growth is anticipated next year amid lower interest rates, although tariffs on imports proposed by President-elect Donald Trump's administration may increase raw material prices.

Motor vehicle and parts output surged by 3.5% last month, while production of aerospace and miscellaneous transportation equipment fell by 2.6%, primarily due to declines in aircraft parts manufacturing, which followed a 6.7% drop in October.

Durable manufacturing production rose by 0.7%, influenced by gains in machinery output. Conversely, nondurable manufacturing output fell by 0.3%, hindered by decreases in apparel and leather, as well as petroleum, coal products, and paper.

Mining output decreased by 0.9% after a slight decline of 0.1% in October. Utilities production fell by 1.3%, with unseasonably mild temperatures reducing demand for electric and natural gas utilities, following a 1.3% increase in October.

Overall industrial output slipped by 0.1% last month following a 0.4% slide in October, and it also declined by 0.9% year-on-year in November.

Capacity utilization in the industrial sector, which measures how fully firms are using their resources, dropped to 76.8% from 77.0% in October, and is 2.9 percentage points below the 1972–2023 average. The operating rate for the manufacturing sector inched up by 0.1 percentage point to 76.0%, also 2.3 percentage points below its long-run average.