In contrast to this morning’s good news on consumption, production continued its lackluster 2023 all the way to the end.

Total industrial production (blue in the graph below) increased 0.1% in December, but revisions to the two previous months totaled -0.2%, so the net result was a -0.1% decrease compared with where we thought we were in November. Manufacturing production (red) had an identical December increase and negative revisions. The below graph shows each in comparison with their respective September and October 2022 peaks. 

(Click on image to enlarge)

Total production remains down -1.0% since then, and manufacturing production down -1.2%.

Because December 2022 was awful, with declines of -1.5% and -2.2% respectively, the YoY comparisons for total and manufacturing production improved to +1.0% and 1.2%:

(Click on image to enlarge)

The conclusion remains that manufacturing is in at least near-recessionary conditions. But because manufacturing forms a significantly lower share of the economy now than it did before the “China shock” that began in 1999, it isn’t enough to tip the entire economy over. Construction in particular has been holding up well - and we’ll get the latest read on that sector with tomorrow’s report on housing permits and starts.

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