US Manufacturing Output Accelerates in December

The U.S. manufacturing sector experienced a significant acceleration in output during December 2023, driven by a rebound in production at Boeing following the end of a crippling strike. According to the Federal Reserve, factory output increased by 0.6% in December, surpassing economists' expectations of a 0.2% gain. This surge in manufacturing activity was supported by a rise in the Institute for Supply Management's (ISM) Purchasing Managers Index (PMI), which climbed to a nine-month high of 49.3% in December, indicating a slower rate of contraction in the manufacturing sector.



The December output acceleration was primarily driven by several key sectors within the U.S. manufacturing industry. The production of primary metals, such as iron and steel, increased by 1.7% in December, contributing significantly to the overall output growth. This sector is crucial for various industries, including construction and automotive, and its rebound helped to boost manufacturing activity.

Another significant contributor to the December output surge was the aerospace and miscellaneous transportation equipment sector. This sector experienced a substantial increase of 6.3% in December, driven primarily by the end of a crippling strike at Boeing. The strike, which ended in November, had previously depressed overall manufacturing production in September and October. The rebound in this sector contributed significantly to the December output acceleration, as the strike's end allowed Boeing to resume production and meet pent-up demand.

Nondurable manufacturing also played a role in the December output surge, with the production of nondurable goods rising by 0.7% in December. This sector includes essential items such as food, energy products, clothing, and cleaning products, which are in high demand for daily consumption. The broad gains across this sector contributed to the overall output acceleration in the manufacturing sector.

Utilities production also contributed to the December output surge, with a 2.1% increase driven by a 6.2% increase in natural gas output amid freezing temperatures. This increase in utility production helped to offset some of the decline in manufacturing production experienced earlier in the year and contributed to the overall output acceleration.

The end of the Boeing strike in November 2023 had a significant impact on overall manufacturing production in the fourth quarter. The recovery in production at Boeing helped to offset some of the decline in manufacturing production experienced earlier in the year, contributing to a 0.6% increase in factory output in December 2023. This increase was higher than the expected 0.2% gain, indicating a strong rebound in manufacturing activity.

The Institute for Supply Management's (ISM) Purchasing Managers Index (PMI) played a significant role in the December output surge in the U.S. manufacturing sector. The PMI rose to a nine-month high of 49.3% in December 2023, up from 48.4% in November, indicating a slower rate of contraction in the manufacturing sector. This improvement in the PMI was driven by an increase in new orders, production, and employment, as well as a decrease in supplier delivery times. The PMI's rise suggests that manufacturing activity was stabilizing and that the sector was poised for a potential rebound in the coming months. Additionally, the PMI's sub-index for new orders climbed to 52.5% in December, indicating expansion in new orders for the second consecutive month, further supporting the notion that manufacturing output was surging.

In conclusion, the U.S. manufacturing sector experienced a significant acceleration in output during December 2023, driven by a rebound in production at Boeing following the end of a crippling strike. The output surge was supported by a rise in the Institute for Supply Management's (ISM) Purchasing Managers Index (PMI) and was primarily driven by several key sectors within the U.S. manufacturing industry, including primary metals, aerospace and miscellaneous transportation equipment, nondurable manufacturing, and utilities production. The end of the Boeing strike in November 2023 had a significant impact on overall manufacturing production in the fourth quarter, contributing to the December output acceleration. The U.S. manufacturing sector appears to be stabilizing and poised for a potential rebound in the coming months, as indicated by the rise in the ISM PMI and the surge in manufacturing output.