MAPI Analysis on Industrial Production: ‘Encouraging End’ to 2011

The following is an analysis from Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), regarding the industrial production report for December 2011: 

“The Federal Reserve announced today that industrial production increased 0.4 percent in December.  Manufacturing production increased 0.9 percent while electric utilities saw a 2.7 percent decline, but mining industries increased 0.3 percent,” noted Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). “The outsized gain in manufacturing production in December more than offset the 0.4 percent decline in manufacturing production reported in November.  In the fourth quarter of 2011, manufacturing production increased at a 3.9 percent annual rate from the previous quarter and manufacturing production grew 4 percent in 2011 compared to 2010.

“Manufacturing experienced strong growth in December and was distributed across many industries within the sector,” Meckstroth added. “Fourteen major manufacturing industries grew while only six industries declined in December. The increases were significant in both the durable goods (0.9 percent) and nondurable goods sectors (0.8 percent).  The December industrial production report is an encouraging end to the year as the U.S. outlook is racked with uncertainty.  Europe, a major export market, has likely slipped into another recession and there is much uncertainty concerning the possibility of contagion from the European banks, risks of public policy mistakes, and a crisis of confidence here in the United States.  

“MAPI believes that the U.S. economy will grow at a modest 2.1 percent pace in 2012 and manufacturing production will increase at a faster 3.4 percent growth rate,” he concluded. “The superior growth in manufacturing comes from pent up demand for motor vehicles, the need to upgrade business equipment, and more investment in energy and mineral exploration.”