DE: Industrial Production

Fri Aug 07 01:00:00 CDT 2015

Consensus Actual Previous
Month over Month 0.4% -1.4% 0.0%
Year over Year 2.5% 2.1%

Industrial production in June tumbled 0.9 percent on the month after increasing a revised 0.2 percent in May. The monthly decline was the largest since last August. Despite relatively weak year ago data, the annual increase was only 1.2 percent after gaining 2.5 percent in May. The June reading means that the industrial sector's output in the second quarter remained unchanged at the previous quarter's level.

Manufacturing dropped 1.4 percent on the month with all subgroups in negative numbers with the exception of energy which was up 2.3 percent after sinking 2.7 percent in May. Consumer goods were down 2.6 percent while construction tumbled 4.5 percent. Capital goods lost declined 2.6 percent while consumer goods and capital goods slipped 0.2 percent and 0.3 percent respectively. Intermediates slumped 1.3 percent.

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.