By Eric Bush, CFA - Gavekal Capital Blog
Industrial production in January increased by a very unexpected 0.9% in January. This was well above expectations as analysts were expecting a 0.4% MoM increase according to Bloomberg. Industrial production was helped by a 2.8% increase in vehicle production. So while the overall year-over-year change in industrial production is still negative at -0.7%, the manufacturing portion of industrial production is increasing again and is 1.23% higher than a year ago.
Perhaps even more important than the fact that manufacturing is growing, capacity utilization surprised to the upside in January as well. Capacity utilization jumped from 76.5% to 77.1%. It was the largest 1-month increase since December 2010. Economic utilization (capacity utilization minus unemployment rate) increased 0.8% which is the largest jump since December 2010 as well.