World Economy

US Industrial Output Slumps in December

US Industrial Output Slumps in DecemberUS Industrial Output Slumps in December

US industrial production fell for the third straight month in December, a weak end to the year that underscored a worsening outlook for fourth-quarter economic growth.

Industrial output dropped 0.4% after a downwardly revised 0.9% decline in November, the US Federal Reserve said on Friday. The Fed had previously reported a 0.6% drop for November, Reuters reported.

Economists polled by Reuters had forecast industrial production declining 0.2% last month. For the fourth quarter as a whole, industrial production fell at an annual rate of 3.4%. The industrial sector measured by the US central bank comprises manufacturing, mining, and electric and gas utilities.

A strong dollar, less inventory investment and cuts by energy firms due to sustained low oil prices have hurt industrial production.

The slump in output primarily reflected cutbacks for utilities and mining, the Fed said. The utilities sector has suffered due to warmer-than-usual temperatures across much of the country, which has reduced demand for heating. Manufacturing output slipped 0.1% in December and by a downwardly revised 0.1% in the prior month.

With overall output declining, the percentage of industrial capacity in use fell 0.4 percentage points to 76.5% in December, from a downwardly revised 76.9% in November.

The Fed views capacity use as a leading indicator in deciding how much further the economy can grow before sparking higher inflation.