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.

 

Headline seasonally adjusted Industrial Production (IP) was up 0.5 % month-over-month and up 1.5 % year-over-year.

Econintersect‘s analysis using the unadjusted data is that IP growth accelerated 2.0 % month-over-month, and is up 2.1 % year-over-year.

The unadjusted year-over-year rate of growth accelerated 0.4 % from last month using a three month rolling average, and is up 0.7 % year-over-year.

The market was expecting (from Bloomberg / Econoday):

Headline Seasonally Adjusted Consensus Range Consensus Actual IP (month over month change) -0.1 % to 1.1 % +0.4 % +0.5 % IP Subindex Manufacturing (month over month change) -0.7 % to 0.4 % +0.3 % -0.4 % Capacity Utilization 75.5 % to 76.6 % 76.0 % 76.1 %

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 %.