|Month over Month||-0.1%||0.0%||0.9%||0.6%|
|Year over Year||2.3%||2.1%||1.4%||1.1%|
Industrial production in May was only unchanged at its April level and that after a smaller revised 0.6 percent rise at the start of the quarter. However, weakness in the year ago data saw annual workday adjusted growth nearly double to 2.1 percent.
May's headline stagnation which was still marginally stronger than expected masked a much more respectable 0.4 percent monthly advance in manufacturing within which increases in consumer goods (1.3 percent) and capital goods (0.4 percent) comfortably more than offset a 0.2 percent slide in intermediates. Otherwise, energy slumped 3.1 percent versus April and construction was off 0.5 percent.
Average industrial production in April/May was 0.4 percent above its mean level in the first quarter when it expanded 0.5 percent. This leaves the sector on course to make another modest contribution to second quarter real GDP growth but also probably means that any pick-up in overall economic momentum will rely upon faster growth in services. To this end the June PMI surveys were quite optimistic but in general the recovery remains on a disappointingly sluggish trajectory.
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.
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