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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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  • Industrial Production Increases 1 comment
    Feb 17, 2010 5:16 PM

    Last week I reported on the Ceridian-UCLA Pulse of Commerce Index (the PCI) which plunged January.  This indicator measures trucking diesel fuel consumption and is considered to be an indicator of Industrial Production which was reported this week.  Today the Federal Reserve reported that Industrial Production increased by 1.0% from December.  The "V" shape in Industrial Production recovery so far is evident in the following graph:

    The previous article pointed out the unusual pattern that appeared to have created an unusually large bulge in the December PCI due to a delay in the expected peak in Christmas shipping that had occurred in October and November in prior years, but not in 2009.

    The three month moving average for the PCI was up narrowly (0.28%) at an annual rate of 3.3%.  The monthly data is very noisy for PCI.  (See the graph in the previous article.)  Take this month's results as a case study to validate using the 3-month moving average of PCI and not the month to month change.

    The same Federal Reserve report listed an increase in capacity utilization to a level just above the previous 60-year low in the recession of 1981-82.  See the graph from Calculated Risk:

    Click on graph for larger image

    Capacity Utilization has increased by 6% from the July 2009 record low.

    Disclosure: No stocks mentioned.

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  • TeresaE
    , contributor
    Comments (3041) | Send Message
    Amazing how great the utilization numbers can look once companies give up and shutter buildings forever.
    18 Feb 2010, 08:38 AM Reply Like
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