IN: Industrial Production

August 12, 2016 07:00 CDT

Consensus Actual Previous
Change Y/Y 1.5% 2.1% 1.2%

Factory goods output was surprisingly firm in June with annual growth up 2.1 percent and was comfortably above market expectations and the strongest outturn since February.

Eighteen out of the twenty two industry groups in the manufacturing sector grew during the month of June 2016 when compared with the previous year. Radio, TV and communication equipment & apparatus' was up 15.8 percent followed by 8.8 percent in motor vehicles, trailers & semi-trailers and 8.7 percent in other transport equipment. However electrical machinery & apparatus and luggage, handbags& saddlery declined.

Industrial production measures the physical output of the nation's factories, mines and utilities. Data are not seasonally adjusted and the main is on the annual growth rate of total industrial production and, within that, manufacturing output. The report is usually released around six weeks after the end of the reference month.

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.

The index is a quantitative index with the production of the items being expressed in physical terms. The Index is compiled by taking into account the quantities of items produced during the current month, compared with the average monthly production in the base year. Selection of items is based on the total production of the items as the primary (main) product as well as secondary (by) product. Data are available monthly within six weeks of reference month.