IT: Industrial Production

Fri May 08 03:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.2% 0.4% 0.6% 0.6%
Year over Year -0.1% 1.5% -0.2% -0.2%

Industrial production (ex-construction) rose a surprisingly large 0.4 percent on the month in March following a marginally firmer revised 0.7 percent gain in February. What was the fifth increase in the last six months saw annual workday adjusted growth accelerate from minus 0.1 percent to 1.5 percent, its strongest performance since April 2014.

March's monthly headline increase was led by consumer goods which were up 1.4 percent (non-durables 2.2 percent) and supported by intermediates which rose 0.3 percent. However, capital goods were off 0.2 percent and energy slipped 0.1 percent.

For the first quarter as a whole, industrial production increased a quarterly 0.4 percent, up from 0.1 percent in the October-December period and probably enough to secure positive real GDP growth for the first time since the third quarter of 2013.

With domestic demand still very sluggish and profit margins in a tight squeeze, manufacturing is not out of the woods yet. Nonetheless, April's PMI recorded a fourth successive rise and, at 53.8, posted its second highest reading in the last four years. A slow recovery does seem to be finally unfolding.

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.