Headline IP Squeaks Higher on Mining and Weather, While Core Manufacturing Sits It Out

PRESS RELEASE SUMMARY

The official 2025-12-23 release says industrial production (IP) edged up 0.2% in November after -0.1% in October, but the backbone—manufacturing—was flat in November after -0.4% in October. The headline resilience lives in utilities and mining; the core is signaling stall speed.

Here’s what the data reveals:

• Headline IP averaged +0.1% per month over October–November, the same as September, but manufacturing declined on net, with durables -0.5% (Oct) and -0.1% (Nov).

• Capacity utilization is subdued: total at 76.0% (about 3.5 pp below its long-run average), manufacturing at 75.4% (2.8 pp below)—despite year-over-year gains of +2.5% (total) and +1.9% (manufacturing).

• Leadership is narrow: aerospace and miscellaneous transportation +3.2% over the two months; computer/electronic products +2.3%. Autos are the drag: motor vehicles and parts -5.1% (Oct) and -1.0% (Nov).

• Utilities and mining injected volatility: utilities +2.6% (Oct), -0.4% (Nov); mining -0.8% (Oct), +1.7% (Nov).

• Construction supplies -1.6% over the two months; materials flat in October and +0.2% in November—hardly the stuff of an industrial upswing.

Two-Month Snapshot: Where the Growth Actually Came From

Utilization check:

• Total utilization: 76.0% (Nov), about 3.5 pp below long-run average

• Manufacturing utilization: 75.4%, 2.8 pp below long-run average

• Mining utilization: 86.3%, 1.1 pp above long-run average

• Utilities utilization: 70.9%, “substantially below” long-run average

Headline Growth, Core Stall

The release leans on “on average, IP rose 0.1 percent per month across October and November.” True—and not impressive. The companion line concedes “manufacturing output declined, on net, in October and November,” which is the more important fact for cyclicality. The split is stark:

• Goods factories are treading water: manufacturing -0.4% in October, 0.0% in November.

• Headline stability is courtesy of mining +1.7% in November and a weather bump in utilities (+2.6% in October, -0.4% in November).

If you’re looking for breadth, it’s not here. Within durables, most groups fell across the two months, with autos doing most of the damage—motor vehicles and parts -6.1% cumulative across October–November. Nondurables offered a token +0.1% in November after -0.2% in October, not enough to offset weakness elsewhere.

Bottom line: A flat manufacturing print after a -0.4% drop is not a pivot—it's a pause in a soft patch.

Utilization: Slack Hiding Behind Year-Over-Year Gains

The press release highlights +2.5% y/y total IP and +1.9% y/y manufacturing. That sounds fine until you look at operating rates:

• Total utilization at 76.0% and manufacturing at 75.4% are both well below their long-run averages (roughly 3.5 and 2.8 percentage points, respectively).

• Manufacturing utilization is 0.4 pp below September, signaling mild downshift even as the headline y/y narrative cheers momentum.

Low utilization means slack. Slack means limited pricing power and a cap on near-term capex urgency. It’s also consistent with the recent disinflation in core goods and the mixed readings in ISM manufacturing.

For policy watchers: subdued factory utilization undermines the case for demand-driven overheating in the industrial sector. If the Fed is scanning for capacity constraints, they won’t find them here.

Sector Leadership Is Talented—but Thin

Two areas did the heavy lifting:

• Aerospace and miscellaneous transportation: +3.2% over October–November.

• Computer and electronic products: +2.3% on net over the two months; information processing equipment rose in both months.

Meanwhile, consumer-facing durables struggled as autos sank, and business equipment’s modest +0.3% in November was largely an information-processing story. Transit and industrial/other equipment were “mixed,” hardly a broad-based rebound.

This is a classic narrow-market tape: world-class franchises pushing higher while a wide swath of the factory floor lags. Great for select multiples; fragile for the cycle.

Utilities and Mining: Weather and Wells, Not Factories

Utilities rose +2.6% in October, then fell -0.4% in November. The operating rate rose 1.0 pp on net to 70.9%, yet remains “substantially below” its long-run average. Translation: weather noise, not structural strength.

Mining’s +1.7% in November after -0.8% in October provided welcome support to the headline, with utilization at 86.3%—a rare pocket above the long-run average. But mining is volatile and price-sensitive. If energy prices wobble, so will this cushion.

Strip out these swings and the manufacturing picture looks weaker than the headline suggests.

Construction and Materials: Not the Stuff of an Upswing

If the industrial cycle were re-accelerating, you’d expect materials and construction inputs to turn decisively. They didn’t:

• Materials: flat in October, +0.2% in November.

• Construction supplies: -1.6% across October–November (net).

These are early-cycle indicators. Their softness is inconsistent with the “resilient growth” storyline and more consistent with a grinding, range-bound industrial backdrop.

Revisions and the Story They Tell

The 2025-12-23 release embeds an annual revision (issued 2025-11-24) that:

• Incorporates the 2022 Economic Census, converts to NAICS 2022, updates weights, seasonal factors, and methodologies.

• Nudges mid-2025 levels higher: total IP in June–September revised up by 0.1–0.3 index points; manufacturing levels similarly lifted (June 96.9 vs 96.8, July 97.2 vs 97.0, August 97.3 vs 97.0, September 97.3 vs 97.0).

• Moderately raises capacity/utilization estimates for mid-2025.

Effect on the narrative:

• The “midyear swoon” now looks less severe; recession risk then was overstated by preliminary data.

• But post-revision, the recent pattern is unchanged in spirit: October–November show renewed core strain, with headline stability reliant on mining and utilities.

In short, the baseline is a bit higher, the slope is not.

What This Means for Markets

• Equities: Favor selective over broad beta. Aerospace/defense and compute-heavy electronics have operational momentum. Be cautious on autos and consumer durables tied to vehicle demand; the -6.1% two‑month hit to motor vehicles and parts is still working through inventories and margins.

• Industrials: Prefer firms with asset-light exposure to information processing and aerospace supply chains over capital-heavy names tethered to construction supplies and basic materials. Utilization at 75.4% in manufacturing argues against a near-term capex boom.

• Credit: Low utilization plus narrow leadership is a classic spread-widening cocktail if growth stumbles. Keep quality bias in cyclicals; watch sub-investment-grade autos, parts suppliers, and building products.

• Rates: Industrial slack supports the disinflation narrative in core goods. This tilts risk toward a slightly easier policy path if services decelerate. Duration can work on growth disappointments; curve steepeners favored if policy easing expectations build while mining stays relatively tight.

• Commodities: Mining’s 86.3% utilization offers supply responsiveness. If energy prices soften, expect headline IP to lose its safety net. Bias toward range trading versus chasing breakouts.

What to Watch Next

• ISM Manufacturing: New orders and employment—confirmation of breadth or lack thereof.

• Auto channel: Production schedules versus dealer inventory—does -1.0% in November mark stabilization or just a slower slide?

• Capex proxies: Core capital goods shipments and orders to corroborate the information-processing outperformance.

• Utilities normalization: A retracement in weather effects would expose the true underlying industrial pulse.

The industrial data aren’t flashing crisis, but they’re not backing a boom either.

The Investor Takeaway

Headline IP managed +0.2% in November, but the center of gravity is weak: manufacturing is flat after -0.4%, utilization sits well below norms, and sector leadership is concentrated in aerospace and information processing while autos and construction inputs sag. Trade this as a narrow, quality-led tape—own the winners with genuine demand tailwinds and balance sheets to match, fade broad cyclicals until utilization tightens, and keep a measured duration bid as industrial slack leans against reacceleration narratives. In this tape, the smart money doesn’t chase the headline—it follows the operating rates.