|Month over Month||-0.8%||-2.3%||1.4%|
|Year over Year||3.3%||-0.5%||6.6%||6.8%|
Goods production (ex-construction) fell back sharply in January. Following an unrevised 1.4 percent monthly bounce in December, output dropped a much steeper than expected 2.3 percent, its worst performance in five years. Annual workday adjusted growth slumped from 6.8 percent to minus 0.5 percent.
January's nosedive was dominated by a 5.3 percent monthly slide in capital goods production but outside of energy (3.1 percent) all of the major sectors saw sizeable declines. Hence, intermediates were off a hefty 3.4 percent, consumer durables 3.8 percent and non-durables 1.3 percent.
The setback put production at the start of the year 1.2 percent below its fourth quarter average and at its lowest level since last July. Consequently, with January industrial production in France contracting 0.3 percent and Spanish output up just 0.3 percent, a probable rise in Eurozone output (report due tomorrow) will be heavily dependent upon a 2.8 percent monthly surge in Germany. While just one month's worth of data, the lack of regional balance is not a good sign for Eurozone recovery prospects this year.
Industrial production measures the physical output of the nation's factories, mines and utilities. Construction is excluded. Approximately 4,100 companies provide data on more than 8,000 monthly flows of production.
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 PPI and the orders data, construction is excluded from the data. 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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