US factory activity posts unexpected rise at the end of 2019

us economy manufacturing growing

  • A gauge of American industrial output slipped further at the end of 2019.
  • But manufacturing activity showed signs of stabilizing, unexpectedly edging 0.2% higher.
  • The Institute for Supply Management said in early January that manufacturing activity contracted for a fifth straight month in December.
  • Visit Business Insider's homepage here.

A gauge of American industrial output slipped further at the end of 2019, but manufacturing activity showed signs of stabilizing.

The Federal Reserve said Friday that industrial production - which measures factory, mine, and utility output - fell 0.3% in December. That was in line with economist expectations and the third decline in the past four months. Output was down 1% compared with a year earlier.

Manufacturing activity, the largest part of the industrial production measure, unexpectedly edged 0.2% higher last month. The increase was a welcome surprise in the sector, which has struggled to climb out of the mild recession it fell into in 2019.

But utilities output plunged 5.6%, partly because of an unseasonably warm December that dampened demand.

The Institute for Supply Management said in early January that manufacturing activity contracted for a fifth straight month in December, despite an interim trade agreement between the US and China. Tariffs between the two sides have exacerbated a broader slowdown in the sector, recent Fed research found, and chipped away at factory jobs.

A combination of reduced policy uncertainty under the agreement and solid domestic demand will likely boost output at least modestly in the first half of the year, Pantheon Macroeconomics chief economist Ian Shepherdson said.

"The sector is still weak, but the disaster signaled by the ISM index looks to have been dodged," Shepherdson said. "Businesses are not happy about the trade war, but the hit to sentiment seems to have been worse than the damage to real economic activity."

{{}}
Add Comment()
Comments ()
X
Sort By:
Be the first one to comment.
We have sent you a verification email. This comment will be published once verification is done.