JP: Industrial Production

Wed Apr 29 18:50:00 CDT 2015

Consensus Actual Previous
Month over Month -2.2% -0.3% -3.4%
Year over Year -3.3% -2.9% -2.6%

March industrial production dropped a much less than anticipated 0.3 percent on the month analysts were expecting a drop of 2.2 percent. It was the second consecutive decline. On the year, output was down 2.9 percent. The monthly reading showed great fluctuations, but Thursday's reading means it has been in negative territory for seven of the previous twelve months.

Electrical machinery was down 3.7 percent after declining 5.7 percent in February. Petroleum & coal products retreated 7.7 percent on the month after increasing 2.7 percent the month before. Fabricated metals were down for a second month, this time by 2.7 percent.

According to the survey of production forecast in manufacturing, production is expected to increase 2.1 percent in April and decrease 0.3 percent in May.

Industrial production measures the physical output of the nation's factories, mines and utilities.

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 won't 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.

Industrial production provides key industry data for this export-dependent economy. The data are issued twice a month-a preliminary estimate at the end of the month for the preceding month and a revised estimate about two weeks later. All products, whether sold domestically or abroad, are included in the calculation of industrial production. Industrial production is highly sensitive to the business cycle and can often predict future changes in employment, earnings and income. For these reasons industrial production is considered a reliable leading indicator that conveys information about the overall health of the economy. 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.