US IP exceeds expectations in Nov with 1.3% mom gain – ING

FXStreet (Barcelona) - Rob Carnell of ING notes that the US industrial production exceeded expectations by rising to 1.3%mom beating the consensus at 0.6%mom, balancing the risks towards Fed dropping the “considerable phase” in its Wednesday’s meeting.

Key Quotes

“US industrial production was a relief, following a startling weak Empire manufacturing survey slightly earlier. The production strength was fairly broad-based. Production itself was up 1.3%mom, beating the consensus 0.6%mom expectation. And manufacturing also rose a decent 1.1% mom, building on a 0.4% gain in October. Utilities bounced back from October’s weak 0.7% decline to post a 5.1% increase, almost wholly weather related we expect, and unlikely to be repeated in December, when cold weather is the norm and should be covered by the seasonals.”

“The only fly in the ointment was the mining component. This was down 1.0%mom in October, and dipped a further 0.1% in November. With oil prices still below $60/bbl (WTI), and commodity prices generally low, we may see this trend extending in the months ahead, unless these prices begin to stage a turnaround, soon.”

“With all eyes on Wednesday’s FOMC decision, and in particular, the “considerable time” phrase in the text, whose removal will imply a rate hike within about 6 months, this production data shifts the balance of risks towards dropping that phrase. But with CPI out on Wednesday, and likely to show a decent decline in headline inflation, we still marginally favour no change to this part of the text. This is getting awfully close though.”