The headlines say seasonally adjusted Industrial Production (NYSE:IP) declined month-over-month. Our analysis agrees but there was significant upward revision to the data for the last six months.
There was significant upward revision to the existing data over the last 6 months. So industrial production is pretty much at the same level as we thought it was last month. The best way to view this is the 3 month rolling averages which insignificantly declined. Industrial production is in a long term upward trend.
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 3.5 % year-over-year.
- Econintersect's analysis using the unadjusted data is that IP growth decelerated 1.1 % month-over-month, and is up 3.5 % year-over-year.
- The unadjusted year-over-year rate of growth decelerated 0.1 % from last month using a three month rolling average, and is up 3.9 % year-over-year.
- The market was expecting (from Bloomberg / Econoday):
|Headline Seasonally Adjusted||Consensus Range||Consensus||Actual|
|IP (month over month change)||-0.6 % to 0.5 %||+0.1 %||-0.1 %|
|IP Subindex Manufacturing (month over month change)||-0.8 % to 0.4 %||+0.1 %||-0.7 %|
|Capacity Utilization||77.4 % to 78.3 %||78.0 %||77.9 %|
IP headline index has three parts - manufacturing, mining and utilities - manufacturing was down 0.7 % this month (up 1.7 % year-over-year), mining up 1.8 % (up 12.6 % year-over-year), and utilities were up 1.1% (up 4.0 % 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.
Industrial production growth will vary month-to-month. But based on the current trend lines, this month's data is not signalling any change to the current trend lines.
Other Economic News this Week:
The Econintersect Economic Index for June 2018 improvement cycle continues and remains well into territory associated with normal expansions. There are continuing warning signs of consumer over-consumption, as well as a degrading relationship between retail sales and employment.
Please visit our landing page for a summary of 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.