January 2018 Industrial Production Improvement Trend Continues

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

Analyst Opinion of Industrial Production

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)