|Month over Month||0.2%||-0.3%||0.0%||0.5%|
|Year over Year||1.2%||1.3%||0.6%||1.2%|
Industrial production (ex-construction) was surprisingly soft in March but only after a sharp upward revision to output in February. Hence, a 0.3 percent monthly fall at the end of the first quarter followed a 0.5 percent increase in February and lifted annual growth from 1.2 percent to 1.3 percent, a tick above the market consensus.
In fact, underlying trends were more promising anyway as manufacturing output rose 0.3 percent versus February when it increased 0.5 percent. Rather, March's headline weakness was primarily attributable to a near-3 percent slump in the volatile mining and quarrying, energy, water supply and waste management subsector. Within manufacturing, food and drink gained 1.0 percent, coke and refined petroleum products fully 6.6 percent and transport equipment 0.6 percent. The other manufactured goods category also edged 0.1 percent firmer but electrical equipment and machinery followed a 0.6 percent decline last time with a 0.4 percent loss. Construction rose 0.9 percent.
The March data put first quarter industrial production some 1.4 percent above its fourth quarter level and manufacturing output 0.8 percent higher. This points to a tidy contribution from the goods producing sector to real GDP growth last quarter and paints a significantly more optimistic picture than recent PMI surveys.
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.
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