US DATA
Industrial production bounced in December with solid underlying drivers although it only helps reverse some weakness in late Q3/early Q4. With signs of a recent pick-up in orders, it will be worth watching production in the next few months ahead.
- Industrial production surprisingly jumped 0.9% M/M (cons 0.3) in Dec after an upward revised 0.2% M/M (initial -0.1%).
- Utilities may have helped with their 2.1% M/M increase (strongest since May) but manufacturing production was also stronger than expected with 0.6% M/M (cons 0.2%) after an upward revised 0.4% M/M (initial 0.2%).
- Whilst these are the strongest monthly increases for industrial and manufacturing production since Feb and May respectively, heavy declines in Sep-Oct continue to dampen recent trend rates at -1% annualized.
- There are some signs of strength ahead though, with core durable goods orders running hotter recently and with strong increases in latest surveys such as the Philly Fed manufacturing index and NFIB.
- Capacity utilization meanwhile surprisingly increased to 77.6% from an upward revised 77.0%, for its highest since August.
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