Industrial Production Numbers Confirm Bias of Housing Report
According to the Fed's Industrial Production and Capacity Utilization report, Industrial production declined 0.3 percent in December.
A decrease of 5.6 percent for utilities outweighed increases of 0.2 percent for manufacturing and 1.3 percent for mining. For the fourth quarter as a whole, total industrial production moved down at an annual rate of 0.5 percent.
At 109.4 percent of its 2012 average, total industrial production was 1.0 percent lower in December than it was a year earlier. Capacity utilization for the industrial sector fell 0.4 percentage point in December to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2018) average.
"The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November," according to the report.
Purportedly, housing starts surged 16.9% in December from November, but the actual change in single-family units year-over-year was a mere 1.4%.
In the Midwest region, not-adjusted single-family housing starts rose from 9,200 to 9,600. This was reported at a seasonally-adjusted annualized rate of 180,000 and a whopping rise of 56.5% from November.
For more details, please see Housing Starts Surge to a 13-Hear High Thanks to Massive Seasonal Adjustments.
Factoring in the weather and revisions, neither report was all that robust.
Mike "Mish" Shedlock