IT: Industrial Production

Mon Apr 13 04:00:00 CDT 2015

Consensus Actual Previous
Month over Month 0.3% 0.6% -0.7%
Year over Year -0.2% -2.2%

The delayed industrial production data showed a stronger than expected 0.6 percent monthly increase in February, the best performance since June 2014. As a result, annual workday adjusted growth climbed from an unrevised minus 2.2 percent to -0.2 percent.

The mid-quarter rebound was dominated by the capital goods sector where output expanded fully 1.1 percent from its January level. By contrast, consumer goods were only flat and intermediates fell 0.4 percent. Energy was up 3.6 percent.

Today's report is consistent with recent Istat surveys which have pointed to a clear improvement in manufacturing sentiment this year. Moreover, the same survey also found a sizeable increase in business optimism last month so it may well be that output ended the quarter on a solid note too. If so, industrial production last quarter should post its first quarterly increase since the October-December period of 2013.

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.