IT: Industrial Production

Tue Jan 13 03:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.0% 0.3% -0.1% 0.0%
Year over Year -1.8% -3.0%

November's industrial production managed its first monthly rise since August. A 0.3 percent increase versus October, which now shows no change from September, put workday adjusted output 1.8 percent below its level a year ago, up from a 3.0 percent decline at the start of the quarter.

The stronger than expected monthly gain reflected increases in capital goods (0.2 percent) and, in particular, consumer goods (1.8 percent). However, it was not all positive news as both intermediates (minus 0.8 percent) and energy (minus 1.5 percent) struggled.

In fact average industrial production in October/November was still 0.4 percent below its third quarter mean and December output will need to expand an improbably steep 0.9 percent on the month just to keep the overall fourth quarter flat. To this end, in falling to a 19-month low of 48.4 the year-end manufacturing PMI was less than optimistic. Fourth quarter real GDP may have clung onto the previous period's level but anything more would be a real bonus.

Industrial production measures the physical output of the nation's factories, mines and utilities. Approximately 4,300 companies provide data on more than 9,000 monthly flows of production.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios. Like the PPI and the orders data, construction is excluded from the data. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.