|Month over Month||0.7%||0.2%||-1.1%|
|Year over Year||0.5%||0.1%||0.2%||0.3%|
Goods production in October saw its first increase since July but a modest 0.2 percent monthly gain was still comfortably short of expectations. Annual growth dropped a couple of ticks to a minimal 0.1 percent.
The headline data were depressed by a 5.9 percent monthly slump in energy output but there were also falls in consumer goods (0.1 percent) and, in particular, intermediates (1.1 percent). However, capital goods had a good month and a 2.7 percent bounce here easily more than reversed September's 1.2 percent decline. As a result, overall manufacturing posted a respectable 0.7 percent advance although even this failed to offset a 1.1 percent contraction last time. Construction was up 0.7 percent following a 2.0 percent drop.
Today's figures put overall industrial production 0.8 percent below its average level in the third quarter when it decreased 0.3 percent versus April-June. However, October's manufacturing orders were up a monthly 1.8 percent and the most recent business surveys have been relatively upbeat. As such the rest of the quarter should see some improvement.
Even so, the fourth quarter does not seem to have got off to a particularly robust start and any acceleration in real GDP growth from the previous period's 0.3 percent rate is likely to only mild at best.
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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