WASHINGTON (AFP) – A downturn in the US manufacturing sector in the final month of 2021, notably the hard-hit auto sector, caused overall industrial output to dip in December, the Federal Reserve said on Friday (Jan 14).
Industrial production slipped 0.1 per cent, surprising economists expecting a modest increase, as manufacturing fell 0.3 per cent in the month, according to the data.
Amid the ongoing shortage of key computer chips that has hampered auto manufacturing, motor vehicles and parts fell 1.3 per cent in December and was about 6 per cent lower than a year earlier, the Fed said.
That decline ended a two-month streak of gains and offered “a sign that the sector’s travails are far from over,” said Kathy Bostjancic of Oxford Economics.
Despite the downbeat end to the year, industrial output is 3.7 per cent higher than in December 2020, the report said.
Bostjancic said that “solid demand will keep industrial production growing strongly in 2022.”
However, she cautioned that “industrial supply chains will continue to face a difficult operating environment this year; the latest surge in (Covid-19) cases already looks to be exacerbating labour problems.”
Rising oil prices helped push the mining sector up 2 per cent compared to November, and output was 11 per cent higher than the final month of 2020.
However, the Fed noted, “the index for mining in December was about 6 percent below its pre-pandemic level.”
Utilities dropped 1.5 per cent in December, which “primarily resulted from a drop in the output of gas utilities, as warmer-than-normal temperatures reduced demand for heating.”
Output in the sector is 3.4 per cent below the year-ago level, the report said.