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Industrial Production Doing Better Than The Headlines Suggest

Summary

Headline seasonally adjusted Industrial Production (IP) was down 0.1 % month-over-month.

But the rolling averages were up 0.4 % month-over-month.

And the data is in a long term improvement cycle.

The headlines say seasonally adjusted Industrial Production (IP) was down month-over-month. Our analysis shows strong improvement.

There was insignificant revision to the existing data over the last 6 months. The best way to view this is the 3 month rolling averages which improved. Industrial production is in a long term upward trend.

The reason for the headwinds in industrial production was due to mining.

Manufacturing employment rate of growth is accelerating year-over-year..

  • Headline seasonally adjusted Industrial Production (IP) was down 0.1 % month-over-month and up 3.7 % year-over-year.
  • Econintersect's analysis using the unadjusted data is that IP growth accelerated 0.8 % month-over-month, and is up 4.2 % year-over-year.
  • The unadjusted year-over-year rate of growth was up 0.4 % from last month using a three month rolling average, and is up 3.8 % year-over-year.
  • The market was expecting (from Bloomberg / Econoday):
Headline Seasonally Adjusted Consensus Range Consensus Actual
IP (month over month change) -0.3 % to 0.5 % +0.2 % -0.1 %
IP Subindex Manufacturing (month over month change) -0.1 % to 0.3 % +0.2 % +0.0 %
Capacity Utilization 77.7 % to 78.2 % 78.0 % 77.5 %

IP headline index has three parts - manufacturing, mining and utilities - manufacturing was up 0.0 % this month (up 1.8 % year-over-year), mining down 1.0 % (up 8.8 % year-over-year), and utilities were up 0.6 % (up 10.8 % year-over-year). Note that utilities are 10.8 % of the industrial production index, whilst mining also is 10.8 %.

Comparing Seasonally Adjusted Year-over-Year Change of the Industrial Production Index (blue line) with Components Manufacturing (red line), Utilities (green line), and Mining (orange line)

Unadjusted Industrial Production year-over-year growth for 2 years has been near or below zero - it is currently trending up and in expansion.

Economic downturns have been signaled by only watching the manufacturing portion of Industrial Production. Historically manufacturing year-over-year growth has been negative when a recession is imminent.

Seasonally Adjusted Manufacturing Index of Industrial Production - Year-over-Year Growth

Seasonally Adjusted Capacity Utilization - Year-over-Year Change - Seasonally Adjusted - Total Industry (blue line) and Manufacturing Only (red line)

Econintersect uses unadjusted data and graphs the data YoY in monthly groups.

Other Economic News this Week:

The Econintersect Economic Index for February 2018 Economic Index declined and returned to territory associated with modest economic growth. Note that this index has been in a general down trend since July 2017

Bankruptcies this Week from bankruptcydata.comnone

Please visit our landing page to view all of our analysis this past week.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.