The Federal Reserve’s new November industrial production figures show that manufacturing grew sequentially for the second straight month following a technical recession. But the increase was negligible, and revisions were slightly negative. In fact, on an annual basis, manufacturing’s after-inflation 1.01 percent November output gain was its worst since winter-affected February, 2014.
The sector’s woes remained concentrated in durable goods. November durables real production fell from October levels and is down since July, led partly by a nearly one percent monthly automotive decline. In addition, the November’s 0.46 percent annual increase was durables’ weakest such performance since July, 2013’s decrease. Non-durable goods output was stronger in both monthly and yearly terms, continuing a recent trend. Still, real manufacturing output remains 1.24 percent lower than its pre-recession highs, eight years ago.
Here are the manufacturing highlights of the Federal Reserve’s new release on November industrial production:
>Manufacturing’s inflation-adjusted output grew in November for the second straight month following a technical recession, but the new monthly 0.11 percent rise was slower than October’s downwardly revised 0.31 percent advance.
>October’s real manufacturing output increase was originally pegged at 0.42 percent. Other revisions were negative on balance as well. September’s real production shrinkage was greater (0.18 percent) than reported last month (0.06 percent). August’s 0.14 percent drop was revised up to a 0.03 percent dip, but July’s 1.03 percent increase was (again) reduced – to 1.02 percent.
>Thanks to this weak recent performance – and to a string of record monthly manufacturing trade deficits – the sector’s year-on-year growth in November (1.01 percent) was its worst such performance since February, 2014’s (0.85 percent).
> The new Fed figures, however, did revise most recent yearly manufacturing production gains upward. October’s after-inflation gain was taken down from 1.94 percent to 1.83 percent, but September’s was revised up from 1.58 percent to 1.81 percent. August’s 1.95 percent advance is now pegged at 2.28 percent, and July’s 1.98 percent increase was revised up to 1.99 percent.
>At the same time, the latest November-to-November figure was much lower than the previous year’s 4.23 percent and even 2012-2013’s 1.38 percent.
>Largely as a result, constant-dollar U.S. manufacturing production is now 1.24 percent below its level when the last recession began – nearly eight years ago (December, 2007).
>Real output of durable goods – the largest sub-sector in manufacturing – also rose for the second straight month. But its latest sequential increase – 0.22 percent – was also slower than October’s upwardly revised 0.59 percent.
>November’s durable goods performance was held down by a 0.96 percent real production drop in the automotive sector – industry’s production leader for most of the current recovery – and a 2.77 percent plunge in the steel-dominated primary metals sector.
>In fact, November primary metals output after inflation marked a three-year monthly low.
>Yet that October durables figure was better than the 0.49 percent originally reported, and other revisions were overall positive as well. September’s 0.26 percent output drop is now reported to have been only 0.23 percent. August’s decline was changed from 0.53 percent to 0.42 percent. Only July showed a deterioration – from 1.25 percent real growth to 1.23 percent.
>Durable goods output gains were much slower on a year-on-year basis, with November’s 0.46 percent inflation-adjusted rise the worst performance since July, 2013’s 0.66 percent decrease.
>All the same, the year-on-year durable goods production revisions were all positive. October’s real yearly output gain is now judged to be 1.46 percent, not 1.23 percent. September’s 1.24 percent was revised up to 1.37 percent. August’s figure is now 2.01 percent instead of 1.91 percent. And July’s gain was revised from 1.64 percent to 1.66 percent.
> The November year-on-year durable goods increase also represents a major slowdown compared with the previous November-to-November’s 5.19 percent jump, and the 2.22 percent constant-dollar advance registered from November, 2012 to November, 2013.
>Inflation-adjusted durable goods production is now 3.28 percent higher than in December, 2007, when the last recession began.
>Non-durables’ real output rose by 0.50 percent in November but revisions put a damper on these results. In fact, they revealed that non-durables production had fallen during the previous two months.
>October’s 0.34 percent monthly increase was downgraded to a 0.03 percent decrease. September’s 0.01 percent rise is now pegged at a 0.11 percent fall.
>The news in non-durables was better for the previous two months. August’s 0.14 percent monthly real production decline was revised up to a 0.19 percent advance, and July’s 0.77 percent jump remained unchanged.
>On a year-on-year basis, inflation-adjusted non-durable goods output climbed in November by 1.64 percent – much higher than the durables number, but lower than October’s downwardly revised 2.23 percent (from 2.76 percent).
>Notably, the latest annual gains for non-durable goods exceeded those for durable goods, in contrast to the pattern that has held for most of the recovery.
>Other non-durables year-on-year revisions were mixed. September’s annual increase is now reported at 2.30 percent, not 2.46 percent. August was upgraded from 2.45 percent to 2.58 percent, but July was downgraded from 2.35 percent to 2.34 percent.
>Non-durables’ latest year-on-year growth lagged 2013-2014’s (3.17 percent) but topped the previous poor reading of 0.46 percent.
>Non-durable goods production, however, is still down by 6.81 percent after inflation since its pre-recession peak in July, 2007.