In 2012, in the month of December, the industrial production of United States had increased by 0.3% which was mainly driven by business performance, in-particular the manufacturing industry. The December’s reading was 2.2 percent above the reading of December 2011, while for the fourth quarter as a whole, industrial output had an annual growth rate of 1 percent. Thus, the industrial production of the country is now at its highest level since June 2008.
There was a drastic increase in the industrial production mainly because of the manufacturing production, which is considered as the largest segment of the industrial segment that accounts for around 12 percent of the U.S economy.
Industrial production had a 1 percent gain in November 2012, since the production returned among the industries even after the negative effect of Hurricane Sandy, according to the U.S. Federal Reserve.
In 2012, the manufacturing production output had increased by 0.8 percent in December, following a 1.3 percent gain in November and a 2.4 percent increase as compared to increase in December 2011. For the fourth quarter, manufacturing production output had a growth of 0.2 percent. Growth in the manufacturing industry was mainly driven by the auto industry and business investment along with stabilization in global growth. The lack of inflation and an improving job market are also helping to improve Americans’ buying power; easing the risk that household spending that will fall as the budget battles in Washington shake confidence.
In the auto industry, because of its stronger performance and recovery of business investment and housing, there is an improvement in the industry.
In December 2012, motor vehicles and parts production had an increase of 2.6 percent after surging 5.8 percent in November. In the same month even business equipment output had an increase of 1.3 percent, along with 1 percent increase in the production of construction supplies.
Meanwhile, mining output also had a growth of 0.6 percent in December 2012, following a 0.3 percent gain in November and 3.3 percent increase over the level for December 2012. But, the production of the utilities fell by 4.8 percent because of the warm weather that decreased the demand for heating.
There was an increase of 0.1 points to 78.8 in the industrial capacity utilization rate in December 2012, which indicates how much of the nation’s production capabilities are currently in use as compared to 1.6 percent increase over the utilization rate for
December 2011. But, the capacity usage remained 1.5 percentage points less compared to the long-run average between 1972 and 2011.
Most of the analysts believe that constant growth through 2013 depends on swift and effective government action to resolve the economic policy issues, inspite of the strong performance in the industrial sector.
The global economic conditions will play an important role in the recovery of production. The decrease in the U.S industry growth is mainly due to the key trading partners for the U.S. manufacturing industry, particularly the European Union and China, which are facing major financial uncertainties.
The recession in the European area and the slowdown in China and other larger emerging markets are very important factors for the health of U.S factories, according to Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). He also said that, the risk of reduction in U.S. manufacturing output has weakened the economic and policy climate in the U.S. and hence, the slow growth for U.S. factories would continue in 2013 also.