U.S. industrial production increased more than expected in December as unseasonably cold weather at the end of the month boosted demand for heating, but manufacturing output barely rose, pointing to moderate growth in the industrial sector.
Strong demand for utilities reported by the Federal Reserve on Wednesday bolstered expectations of an acceleration in consumer spending in the fourth quarter, prompting some economists to bump up their economic growth estimates for the October-December period.
"This is consistent with the solid growth story," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.
The Fed said industrial output surged 0.9 percent last month also buoyed by robust gains in mining production, after slipping 0.1 percent in November.
Economists polled by Reuters had forecast industrial production advancing 0.4 percent in December. It rose at an annual rate of 8.2 percent in the fourth quarter, the biggest gain since the second quarter of 2010.
For all of 2017, industrial output rose 1.8 percent, the first and largest increase since 2014. In another report, the U.S. central bank said the economy continued to expand from late November through the end of 2017.
In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the Fed said "the outlook for 2018 remains optimistic for a majority of contacts across the country."
The reports were seen supportive of an interest rate increase in March from the Fed. Prices for U.S. Treasuries fell, with the yield on the interest rate sensitive two-year note hitting a nine-year high. The dollar briefly rose against a basket of currencies, but later surrendered gains.
Stocks on Wall Street were trading higher.