JP: Industrial Production

Wed Jul 29 18:50:00 CDT 2015

Consensus Actual Previous
Month over Month 0.3% 0.8% -2.2%
Year over Year 1.4% 0.4% -2.4%

June industrial production increased a greater than expected 0.8 percent on the month after sinking 2.1 percent in May. From a year ago, output improved to an increase of 0.4 percent after declining 2.3 percent in May. Among the industries that contributed to the increase were transport equipment (up 2.4 percent), chemicals (except drugs) (up 2.8 percent) and plastic products (up 3.6 percent). All three declined in May.

Slightly less encouraging was that much of the monthly gain came from 1.3 percent growth in inventories after a 0.8 percent decline in May. Shipments were up 0.3 percent, rebounding from a 1.9 percent drop the previous month.

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.