FR: Industrial Production

Fri Apr 10 01:45:00 CDT 2015

Consensus Actual Previous Revised
Month over Month -0.1% 0.0% 0.4% 0.3%
Year over Year 0.6% 0.6% 0.5%

Industrial production (ex-construction) was unchanged in February. Following a slightly smaller revised 0.3 percent monthly increase in January the outcome was in line with market expectations. Annual growth edged a tick higher to 0.6 percent, equalling its fastest pace since November 2013.

The stability of overall output masked very mixed performances across the main production sectors. Hence sizeable monthly increases in refining (3.5 percent) and transport equipment (1.7 percent) contrasted sharply with falls in food and agriculture (0.7 percent) and electronics and machines (1.4 percent. The other manufactured goods category was up just 0.1 percent while energy advanced 0.3 percent and construction fell 2.2 percent. Manufacturing output was also flat at its January level.

The February data put average industrial output in January/February a healthy 1.2 percent above its fourth quarter mean and so point to a useful contribution from goods production to real GDP growth last quarter. This would be in contrast to the much more pessimistic picture painted by the manufacturing PMI surveys which found output falling for a tenth consecutive month in March. The national central bank would seem to trust the official data and just yesterday revised up its first quarter GDP growth forecast from 0.3 percent to 0.4 percent.

Industrial production measures the physical output of the nation's factories, mines and utilities. Manufacturing is seen as the best guide to underlying developments as some sectors can be very volatile and have a misleading impact on the total industrial production reading.

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. 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.