December industrial production: modest pickup, steady trend, no sign of overheating

 

December industrial production: modest pickup, steady trend, no sign of overheating

Overview
The Federal Reserve’s G.17 release for December 2025 (published January 16, 2026) shows a modest improvement in industrial activity. Total industrial production increased 0.4% month over month, while manufacturing rose 0.2%. Mining fell 0.7% and utilities jumped 2.6%, so part of the headline strength reflects utilities (often weather-sensitive) rather than broad-based factory acceleration. (Federal Reserve)

The three-horizon snapshot
Below is the same story told across three timeframes (monthly, 3-month moving average, and year over year), using the numbers in your table (rounded to one decimal):

Industrial production (output)

• Total industrial production: 0.4% m/m, 0.2% (3-month MA), 2.0% y/y

• Manufacturing (NAICS): 0.2% m/m, 0.0% (3-month MA), 2.1% y/y

• Manufacturing (SIC): 0.2% m/m, 0.0% (3-month MA), 2.0% y/y

Capacity utilization (how “tight” the system is)

• Total utilization: 0.2% m/m, 0.1% (3-month MA), 0.5% y/y

• Manufacturing utilization (NAICS): 0.1% m/m, -0.1% (3-month MA), 0.9% y/y

How to interpret it

1. The month looked better than the underlying trend
   A 0.4% monthly gain in total IP is a healthy print, but the 3-month trend in manufacturing is basically flat (0.0% when rounded). That combination often means “a decent month” rather than “a sustained re-acceleration.” The Fed’s release reinforces that split: manufacturing rose in December, but it still declined at a 0.7% annual rate in the fourth quarter. (Federal Reserve)

2. Output growth is stronger than utilization growth
   Year over year, output is up about 2.0%, while utilization is up less than 1.0% in your table. That pattern typically points to improved production without the kind of capacity strain that tends to create bottlenecks. In the official release, capacity utilization for total industry increased to 76.3%, and the operating rate for manufacturing was 75.6%. Both remain below long-run averages, which usually implies slack rather than overheating. (Reuters)

3. The composition matters: utilities did a lot of the lifting
   Utilities rose 2.6% in December while mining fell 0.7%. When utilities are the swing factor, it is wise to avoid over-extrapolating one month’s headline gain into a new trend for factories. (Federal Reserve)

What it may imply for growth and inflation

• Growth signal: positive, but moderate. Output is rising and the year-over-year pace is constructive, yet the 3-month manufacturing trend suggests a steady-to-sideways factory backdrop rather than a breakout. (Federal Reserve)

• Inflation signal: not obviously inflationary from capacity pressure. With utilization still below historical norms, the industrial side is not flashing a classic “too hot” warning. (Inflation can still come from services, housing, wages, or commodities, but the capacity channel looks calm.) (Reuters)

What to watch next

1. Does manufacturing’s 3-month trend turn clearly positive?
   A couple of additional months with manufacturing gains would matter more than one good print.

2. Does utilization rise for the right reasons?
   A healthy cycle typically shows utilization rising because output is consistently improving, not because supply is constrained.

3. Composition: utilities normalization and mining direction
   If utilities cool off next month, does total IP stay firm anyway? That will tell you whether the rebound is broadening.

Source note
Release: Federal Reserve, Industrial Production and Capacity Utilization (G.17), December 2025 data, released January 16, 2026. (Federal Reserve)