DE: Industrial Production

Mon Jun 08 01:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.6% 0.9% -0.5% -0.4%
Year over Year 0.8% 1.4% -0.1% 0.0%

Industrial production rose a somewhat stronger than expected 0.9 percent on the month in April after a marginally smaller revised 0.4 percent drop in March. The increase was the first in 2015 and boosted annual output growth from 0.0 percent to 1.4 percent.

April's monthly advance was led by capital goods which posted a 1.5 percent gain. Intermediates were up 0.7 percent but consumer goods fell 0.9 percent and fully reversed the previous period's increase. Energy (1.4 percent) also boosted headline growth as did construction (1.3 percent). Manufacturing output rose 0.7 percent following a 0.6 percent decrease last time.

Overall industrial production in April was 0.7 percent above its average level in the first quarter when its rose 0.5 percent. Accordingly the latest figures offer some hope of a larger contribution from the sector to real GDP growth this quarter. Rising orders in both March and April bode well but with the manufacturing PMI disappointingly soft in May (51.1), the outlook remains somewhat clouded.

Industrial production measures the physical output of the nation's factories, mines and utilities. Data are collected from companies in the sector with fifty or more employees and include the construction sector.

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 manufacturing orders data, the production index has the advantage of being available in a timely manner giving a more current view of business activity. Those responding to the data collection survey account for about 80 percent of total industrial production. Like the PPI and the orders data, construction is excluded.

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.