Industrial Production Sets New Post-Pandemic High in December - but Mainly Due to Utilities

Why It Matters

The rebound highlights a shifting growth engine toward energy‑intensive tech services, signaling potential sectoral reallocation and influencing monetary‑policy outlooks.

Key Takeaways

• Industrial production hit post‑pandemic high in December.
• Utility output surged 2.6% month‑over‑month.
• Manufacturing rose modest 0.2% after revisions.
• AI data‑center demand drives utility record levels.
• Tariff stability supports manufacturing rebound.

Pulse Analysis

The December industrial production report underscores a structural evolution in the U.S. economy. Historically a bellwether for cyclical peaks, industrial output now reflects a blend of traditional manufacturing and rapidly expanding utility activity. The modest 0.2% gain in manufacturing suggests firms have navigated lingering tariff pressures, yet the sector’s contribution to overall growth remains limited compared with the utility surge.

Utility production’s 2.6% month‑over‑month increase, coupled with a 2.3% year‑over‑year rise, is largely driven by the explosive demand for AI‑powered data centers. These facilities consume vast amounts of electricity, prompting utilities to expand capacity and invest in grid resilience. This trend not only lifts the industrial production metric but also reshapes energy market dynamics, encouraging higher investment in renewable integration and advanced grid technologies to meet tech‑heavy loads.

Looking ahead, the sustainability of this growth hinges on broader macro indicators. The forthcoming personal income and consumer spending report will reveal whether household demand can sustain the current industrial momentum. Moreover, the absence of new tariff escalations provides a stable backdrop for manufacturers, yet any policy shifts could quickly alter the recovery trajectory. Stakeholders should monitor energy pricing, AI adoption rates, and fiscal policy signals to gauge the durability of this post‑pandemic high.

Industrial production sets new post-pandemic high in December - but mainly due to utilities

By New Deal democrat

Industrial production is much less central to the US economic picture than it was before the “China shock,” but it remains an important if diminished economic indicator, particularly since the month it has peaked in the past has typically been the month the NBER has chosen as the economic cycle peak.

In December, headline industrial production (blue in the graph linked below) rose 0.4%, with previous months revised higher 0.2% on net, establishing a new post‑pandemic high, although it remains ‑1.3% below its 2018 all‑time high. Manufacturing production (red) increased 0.2%, and prior months were also revised higher by 0.2%, but it remained slightly below its September 2025 post‑pandemic high:

The difference between the two is mainly due to utility production, which rose 2.6% for the month, and was higher by 2.3% YoY. And all of 2025 on average set new all‑time records for production, most likely driven by AI data‑center needs:

Despite the influence of utility production, this was a positive report, adding to the evidence we have seen in durable goods orders and regional Fed manufacturing reports in the past few months indicating that manufacturing production in particular has been improving. This in turn is most likely due to the lack of new tariff gyrations, and producers having found a modus operandi to deal with the effects of previously imposed tariffs.

That being said, the next comprehensive report on personal income and spending will be crucial to determining whether the autumn lull or downturn in important coincident economic data ended after the end of the government shutdown or not.