|Month over Month||-0.8%||-2.2%||1.0%|
|Year over Year||-2.6%||-2.4%||-0.1%|
In May, industrial production dropped a greater than expected 2.2 percent on the month and declined 2.4 percent from the same month a year ago. The monthly decline was the third in 2015. Expectations were for a mild 0.8 percent monthly drop. Transport equipment was down 5.4 percent after increasing 0.6 percent in April. This was the third monthly decline in 2015. Chemicals (excluding drugs) dropped 6.1 percent after climbing 0.4 percent the month before, most likely reflecting lower commodity prices and weak investment spending. Electronic parts and devices slumped 4.3 percent after gaining 5.4 percent the month before.
According to the survey of production forecast in manufacturing, production is expected to increase 1.5 percent in June and increase 0.6 percent in July. Expectations are that the industries that are most likely to contribute to the June increase are information & communication electronics equipment, transport equipment and general-purpose, production & business oriented machinery.
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.
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