JP: Industrial Production

Sun Dec 27 17:50:00 CST 2015

Consensus Actual Previous
Month over Month -0.6% -1.0% 1.4%
Year over Year -0.1% 0.3%

The industrial production data added to the disappointing slew of economic data. November industrial production declined 1.0 percent on the month and slipped 0.1 percent from a year ago. Output was expected to decline a monthly 0.6 percent. The monthly decline is the first since August. Most major categories retreated on the month. Leading the declines were general purpose, production and business oriented machinery (down 2.5 percent), chemicals excluding drugs (down 2.7 percent) and fabricated metals (down 2.9 percent).

According to the survey of production forecast in manufacturing, production is expected to increase 0.9 percent in December and increase 6.0 percent in January.

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.