U.S. ECONOMICS: RBC Previews Today's Industrial Production Data


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According to Royal Bank of Canada (RY, RY.TO) the stronger-than-expected November payroll employment report "bodes well" for industrial production ( IP ) to rebound 0.7% in the month following a 0.1% decline in October. It says the 0.5% gain in the index of aggregate weekly hours for manufacturing is expected to be mirrored in the manufacturing component of IP rising by a similar amount. Though motor vehicle production dropped 0.7% in the month, the increase in the ISM manufacturing index to 57.3 in November from 56.4 in October implies more than offsetting strength elsewhere in the sector, it says. RBC adds a jump in electricity usage in November suggests further support from a 2.4% gain in utilities output that will more-than-reverse the 1.1% drop in October. Also, a recovery in aggregate hours worked in the mining sector in the month points to a modest rebound in mining output in November following a sizeable 1.6% drop in October. The robust increase in IP contributes to the capacity utilization rate rising to 78.6% from 78.1% in October, RBC forecasts.

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