IT: Industrial Production

June 12, 2017 03:00 CDT

Consensus Actual Previous Revised
Month over Month 0.2% -0.4% 0.4%
Year over Year 2.4% 1.0% 2.8% 2.9%

The goods producing sector had a surprisingly poor April. Excluding construction, output was down 0.4 percent on the month and so fully reversed March's unrevised gain. Annual workday adjusted growth declined from 2.9 percent to only 1.0 percent, a 3-month low.

Weakness was relatively broad-based and but for a 2.2 percent bounce in energy, the headline monthly decrease would have been still sharper. Following healthy rises in February and March, capital goods performed the weakest (minus 1.6 percent) but consumer goods (minus 0.5 percent) and intermediates (minus 0.4 percent) also posted losses.

April's retreat puts industrial production just 0.1 percent above its average level in the first quarter when it contracted 0.4 percent. The trend in output remains up but at a rather gentler pace than suggested by most business surveys. All subsectors show positive annual growth but not by much. A worsening in manufacturing sentiment in May warns of possible sluggish mid-quarter.

Today's report will not help overall Eurozone industrial production (data due Wednesday).

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.