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Hard To Find Good News This Month In Manufacturing

Apr. 22, 2017 7:28 AM ET1 Comment
Steven Hansen profile picture
Steven Hansen's Blog
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The headlines say seasonally adjusted Industrial Production (IP) strongly improved, but headline manufacturing unexpectedly declined. Our view is similar to the headlines.

The market expected improvement this month in industrial production. Utilities were the wobble this month as it strongly improved whilst manufacturing surprsingly fell and mining insignificantly improved. This report is weak as utilities seem to only measure the weather and not the health of the economy. The manufacturing surveys all predicted improvement - and it was NOT delivered. As there was some backward revision in the last six month's of data, the best way to view this is the 3 month rolling averages which improved and remains in expansion..

Manufacturing employment growth remains flat year-over-year..

  • Headline seasonally adjusted Industrial Production was up 0.5 % month-over-month and up 1.5 % year-over-year.
  • Econintersect's analysis using the unadjusted data is that IP growth accelerated 2.0 % month-over-month, and is up 2.1 % year-over-year.
  • The unadjusted year-over-year rate of growth accelerated 0.4 % from last month using a three month rolling average, and is up 0.7 % year-over-year.
  • The market was expecting (from Bloomberg / Econoday):
Headline Seasonally Adjusted Consensus Range Consensus Actual
IP (month over month change) -0.1 % to 1.1 % +0.4 % +0.5 %
IP Subindex Manufacturing (month over month change) -0.7 % to 0.4 % +0.3 % -0.4 %
Capacity Utilization 75.5 % to 76.6 % 76.0 % 76.1 %

IP headline index has three parts - manufacturing, mining and utilities - manufacturing was down 0.4 % this month (up 0.8 % year-over-year), mining up 0.1 % (up 2.9 % year-over-year), and utilities were up 8.6 % (up 4.6 % year-over-year). Note that utilities are 10.8 % of the industrial production index, whilst mining also is 10.8 %.

When one drills down into the data, there are surprising weakness in manufacturing across the board with autos and metals leading the decline.

Hopefully this is a one month abomination.

Other Economic News this Week:

The Econintersect Economic Index for April 2017 improvement trend continues although the value remains in the territory of weak growth. The index remains below the median levels seen since the end of the Great Recession. Six-month employment growth forecast indicates modest improvement in the rate of growth.

Bankruptcies this Week from bankruptcydata.com: Adeptus Health

Please visit our landing page for a summary of all of our analysis this past week.

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