Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The 0.9% pop in industrial production is partly due to a rebound in aircraft production and overstates the current state of the sector. In reality, 2024 was a boring year for manufacturing as high rates and uncertainty hit demand for capex. There’s some optimism in the air for 2025.
Manufacturing Constrained, but Some Signs of Optimism
Industrial activity popped to end what was a pretty lackluster year for the sector. Overall production jumped 0.9% in December which marked the fastest monthly gain since February, but that leaves the index up just a half a percent compared to where it stood a year ago.
Production received a lift by all major components in December. Mining output rose 1.8% and utilities production jumped 2.1% on stronger natural gas production. Much of the overall gain can be traced to the largest component, manufacturing output, which rose 0.6% in December on the heels of upwardly revised data for November.