For the first time in over half a year, industrial production in U.S. factories has declined sharply. The decline was only 0.2 percent, according to The Federal Reserve, including the nation’s factories, utilities and mines.
The largest decrease was in the industrial sector, which dropped 0.4 percent, mostly due to a drop in domestic automobile production. Although the steepest decline was in motor vehicle parts and production, other major decreases were in consumer electronics, office supplies and equipment and retail apparel production rates also decreased.
Over the past two years, manufacturing and factory production have been gradually improving, playing a major role in the slight improvements in the economy. Some experts look at last month’s decline as a bad sign for the economy, but in view of the larger trends, one month of decrease may mean nothing—this sector of the economy is relatively volatile in terms of month-to-month change.
Related to the decreases in total numbers, the number of hours worked by manufacturing workers were down by 0.5 percent in November, reports the Treasury’s jobs report. Some economists suggest that this may be due to a shorter workweek in the last month and the onset of the holiday season.
Although the industrial production side of the economy was lower in the last month, sales of consumer goods rose steadily on the retail side, which means that despite lower production—and the lower wages for workers that come with those cuts—people are still putting money into the economy to prepare for the coming holiday season.
Production of automobiles may be down this month, but that’s compared to the recent production, which has been relatively high because of recent increases in domestic automobile purchases, which continued to rise in November. Hopefully motor vehicle production will catch up after the holidays to meet the continued demand.