Following up another benign inflation report issued 45 minutes earlier by the Labor Department, the U.S. Commerce Department has released a survey showing modest improvement during December in both industrial production and factory utilization.

Specifically, Commerce noted that industrial output had risen by 0.3% during the final month of 2012, which was right on target with the consensus expectation for the month. However, the gain was well shy of the downwardly revised 1.0% gain inked in November. That increase had been initially estimated at 1.1%. Notably, October's estimated output decline of 0.7% was pared to a drop of just 0.3%.

In addition to the aggregate number, the three components: manufacturing, mining, and utilities, showed materially differing results. Specifically, manufacturing, the largest of the three industrial categories by far, noted a formidable increase for the month of 0.8%. That was somewhat less than November's upwardly revised gain of 1.3% (formerly 1.1%), but it was still impressive and further underpins our expectation that while GDP growth likely moderated in the fourth quarter, it may have done so less severely than we had expected earlier. At the same time, production at the nation's mines rose by 0.6% for the month. The big drag was on the utilities side, where warmer weather across much of the country during the final month of 2012 helped to drag output lower by a sizable 4.8%.

At the same time, factory utilization nudged nominally higher, coming in at 78.8%, up 0.1% from November's 78.7% reading. It should ne noted, however, that the initial capacity usage estimate for the penultimate month of the year had been 78.4%.The latest result was the best usage figure since July, when 79.2% of the nation's available industrial capacity had been put to use.

Here, as well, a nice gain was seen in manufacturing, where usage rose from November's 76.9% to the latest month's 77.4%. In addition, mining use rose from 91.5% to 91.9%. Not surprisingly, capacity utilization tumbled at the nation's utilities, falling from an estimated 75.6% in November to 71.8% last month.

Meanwhile, for the year as a whole, industrial production gained 2.2%, while capacity usage rose modestly from 78.3% to the aforementioned 78.8% on December-to-December basis. On the production side, output for the year rose by 2.4% in manufacturing, but fell 2.4% in the high-tech field.

All in all, this was a decent report, but clearly not a game changer, and we continue to expect that the nation's economy expanded by a pedestrian 1.5%, or so, in the just-concluded fourth quarter. We think a similar rate of growth is now likely over the initial three months of the new year, assuming no unpleasant surprises out of Washington.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.