US Industrial Production contracted for the fourth consecutive month in February, falling 1.03% year-over-year. It was the third drop of more than 1% in those four months, leaving the 6-month average now at -0.57%. A single month of -1% is usually associated with recession, let alone three of the past four and a negative six-month average. Except for one four-month period in 1952 and one in 1934, four straight months of IP contraction meant recession every other time in figures that date back to 1919.

Despite the widespread slowing in US industry, inventory remains as abundant as ever and still growing if now more slowly. These estimates on industrial production suggest serious omissions from activity and economic momentum but really not yet any sort of intensity or escalation. I still believe that a very bad sign given that industrial activity may already represent enough deceleration to be consistent with past recessionary appearance but not yet fully involved like one.

The deceleration is widespread and has only recently seized oil production. Even still, the contraction in industrial activity attributed to energy production is not yet large but it is persistent and that does seem to be the direction. The only factor that at this point might force deviation from that likely track is if oil inventories begin to fall quickly enough that production could be restored. That scenario, of course, depends on “demand” suddenly shifting which is not at all indicated by the rest of these industrial estimates (nor financial).

Capacity utilization dropped to just 76.7% in February, only slightly above the low registered in December (revised). Again, that indicates not just widespread industrial slowdown but also inefficiency that usually accompanies it and turns a slowdown into a wholesale adjustment. It is possible that commodity prices have relieved some of the pressure on manufacturing, in particular, insulating those businesses from having to make heavier resource adjustments (especially labor).