The run of good U.S. economic data continued through mid-January, reducing the likelihood of new quantitative easing by the Federal Reserve. Total U.S. industrial production increased by 0.4 percent in December after falling by 0.3 percent in November. Part of the November dip was caused by mild weather as utility output fell by 0.6 percent. Manufacturing output came back strongly in December, up 0.9 percent for the month. Overall capacity utilization continues to improve, climbing to 78.1 percent in December. Recent anecdotal reports of auto factories running three shifts suggest that actual excess capacity in the auto sector may be less than reported by the Federal Reserve. Prices were calm in December. The producer price index for finished goods dipped slightly, by 0.1 percent in December as seasonally adjusted energy prices declined by 0.8 percent. Excluding food and energy, core producer prices increased by 0.3 percent, the largest monthly increased since July, as light truck prices geared up. The consumer price index for December was unchanged for the second consecutive month. The energy price index fell for the third consecutive month, countering a moderate gain in food prices. Total housing starts for December fell back as expected, declining 4.1 percent to a 657,000 unit annual pace. But that was a relatively small retreat off of November’s surge. Initial claims for unemployment insurance have been erratic in January. Last week’s reported increase of 24,000 claims was countered by this week’s reported decline of 50,000 to a level of 352,000 initial claims for the week ending January 14. Mortgage applications for both purchases and refis were solid in early January. Existing home sales for December came in stronger than expected, increasing by 5.0 percent to hit a 4.61 million unit annual pace.
Click here for the complete Comerica Economic Weekly, with forecasts for next week’s data releases and an updated January data calendar: CMAEconWeekly012012.