Industrial Production
Industrial production decreased 0.2% in November after having increased 0.7% in October. Positive increases in mining and utilities were insufficient to offset a drop in manufacturing output. Production in manufacturing industries fell 0.4% following an increase of 0.5% in October. Motor vehicle sales, a component of manufacturing, fell 3.2%. Mining rose 0.1% after stronger growth of 2.1% in the previous month. Utilities rose 0.2% after a 0.3% drop in October. Capacity utilization, which has gradually improved since the end of the recession, declined 0.2 percentage points in November to 77.8% of capacity. The pace of production slowed in November and we do not expect investment growth to pick up from its already strong levels.

Consumer Price Index
The consumer price index was flat in November after falling 0.1% in October. The slowdown in headline inflation was driven by more modest growth in food prices and a decline in energy prices. Energy prices fell 1.6% after falling 2.0% in October. Food prices were flat after a 0.1% drop in October. Over the year the CPI is up 3.4%. Core prices, net of food and energy prices increased 0.2% in November and are up 2.2% over the year. The pace of inflation has slowed in recent months and we do not expect much pressure on prices, even as demand stabilizes in coming months.

Retail Sales
Total retail sales rose 0.2% in November, after rising 0.6% in October. The report was mixed with few strong performances from any category. About half of the categories saw continued gains, with electronics & appliances (2.1%), nonstore retailers (1.5%), and motor vehicles and clothing stores (0.5%) showing the fastest growth. Several categories declined modestly in November, and the declines were modest. Miscellaneous store retailers declined 1.2%, followed by building materials (-0.3%) and food service & drinking places (-0.3%). Despite the modest slowdown in growth, sales are 6.7% above their year-ago level. Core sales, net of building materials, gas stations, and motor vehicle sales, were up by 0.2%. While this report was positive, we do not expect consumption to pick up much from its current level.