The headlines say seasonally adjusted Industrial Production (IP) declined (the manufacturing portion of this index was also down month-over-month). Consider this a soft data point that was expected – but it is marginally worse than what was expected.

 

 

Headline seasonally adjusted Industrial Production (IP) decreased 0.4 % month-over-month and up 0.9 % year-over-year.

Econintersect‘s analysis using the unadjusted data is that IP growthdecelerated 0.6 % month-over-month, and is up 1.2 % 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 1.4 % year-over-year.

The market was expecting (from Bloomberg):

Headline Seasonally Adjusted Consensus Range Consensus Actual IP (month over month change) -0.7 % to 0.5 % -0.2 % -0.4 % Capacity Utilization 77.5 % to 78.5 % 77.8 % 77.6 % IP Subindex Manufacturing (month over month change) -0.5 % to 0.3 % -0.3 % -0.5 %

IP headline index has three parts – manufacturing, mining and utilities – manufacturing was down 0.5 this month (up 1.4 % year-over-year), mining down 0.6% (down 3.2 % year-over-year), and utilities were up 0.6 % (up 3.2 % year-over-year). Note that utilities are 9.8% of the industrial production index, whilst mining is 15.9%.

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 the past 2 years has been between 2% and 4% – it is currently 0.9 %. It is interesting that the unadjusted data is giving a smooth trend line.

Year-over-Year Change Total Industrial Production – Unadjusted (blue line) and the Unadjusted 3 month rolling average (red line)