The headlines say seasonally adjusted Industrial Production (IP) strongly improved, but headline manufacturing unexpectedly declined. Our view is similar to the headlines.
Analyst Opinion of Industrial Production
The market expected improvement this month in industrial production. Utilities were the wobble this month as it strongly improved whilst manufacturing surprisingly 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.
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 %.
