Implications:  We got another double-dose of data this morning, this time showing industrial production increased 0.2% in November following a 0.1% decline in October.  Overall, it looks like industrial production has been growing modestly recently but has generally been weighed down by weakness in the manufacturing sector where we haven’t seen a gain in four months. Looking at the details, the volatile auto sector has been primarily responsible, with activity declining 1.0% in November following a 5.1% decline in October.  However, manufacturing ex-autos (which we think of as a “core” version of industrial production) posted a gain of 0.1% in both November and October. In the past year, auto production (which is also highly sensitive to President Trumps’s tariff policy) is down 5.7% while “core” manufacturing is up 2.7%. Meanwhile the typical bright spots in the “core” measure were present in today’s report as well.  Production in high-tech equipment, which has been a reliable tailwind recently due to investment in AI as well as the reshoring of semiconductor production, posted gains of 1.1% in November and 1.8% in October.  High-tech manufacturing is up 11.8% in the past year, the fastest pace of any major category.  Meanwhile, the manufacturing of business equipment isn’t far behind, up a strong 11.2% in the past year, signaling reindustrialization in the US outside of just the high-tech industries mentioned above. The mining sector was also a source of strength in November, jumping 1.7% following a decline of 0.8% in October. Notably, oil and gas production, the drilling of new wells, and the extraction of other metals and minerals are all up versus September. Look for a continued upward trend in activity in this sector as the Trump Administration takes a more aggressive stance with permitting. Finally, utilities output (which is volatile and largely dependent on weather), declined 0.5% in November after a 2.6% increase in October. In other manufacturing news this morning, the Richmond Fed Index, a measure of factory sentiment in that region, increased to a still weak -7.0 in December from -15.0 in November.

Click here for a PDF version