U.S. December industrial output slumps for third straight month

WASHINGTON, (Reuters) - U.S. industrial production fell for the third straight month in December, a weak end to the year that underscored a worsening outlook for fourth-quarter economic growth.

Industrial output dropped 0.4 percent after a downwardly revised 0.9 percent decline in November, the U.S. Federal

Reserve said on Friday. The Fed had previously reported a 0.6 percent drop for November.

Economists polled by Reuters had forecast industrial production declining 0.2 percent last month.

For the fourth quarter as a whole, industrial production fell at an annual rate of 3.4 percent.

The industrial sector measured by the U.S. central bank comprises manufacturing, mining, and electric and gas utilities.

A strong dollar, less inventory investment and cuts by energy firms due to sustained low oil prices have hurt industrial production.

The slump in output primarily reflected cutbacks for utilities and mining, the Fed said. The utilities sector has

suffered due to warmer-than-usual temperatures across much of the country, which has reduced demand for heating.

Manufacturing output slipped 0.1 percent in December and by a downwardly revised 0.1 percent in the prior month.

With overall output declining, the percentage of industrial capacity in use fell 0.4 percentage points to 76.5 percent in December, from a downwardly revised 76.9 percent in November.

The Fed views capacity use as a leading indicator in deciding how much further the economy can grow before sparking higher inflation.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)

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