IT: Industrial Production

Mon Sep 11 03:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month -0.3% 0.1% 1.1%
Year over Year 4.4% 5.3% 5.2%

Industrial production (ex-construction) held up surprisingly well in July. Following an unrevised 1.1 percent monthly bounce in June, output edged another tick firmer, its third consecutive advance. Annual workday adjusted growth still slipped from 5.2 percent to 4.4 percent but this simply reflected unfavourable base effects.

Outside of energy (minus 3.6 percent), monthly gains were broad-based amongst the major subsectors. Capital goods (1.6 percent) were especially strong but there were rises too in both intermediates (0.3 percent) and consumer goods (0.5 percent).

July's modest gain put overall industrial production a tidy 1.1 percent above its level in the second quarter when it also increased 1.1 percent versus January-March. Accordingly, the upswing in Italian manufacturing looks to be becoming increasingly well established. Service sector surveys have also found a marked improvement in recent months (the July PMI touched a 10-year high) so it may be that the Italian economy can finally start to close its longstanding performance gap with the other large Eurozone states. That said, household consumption remains sluggish and without some strengthening here, sustaining even current GDP expansion rates could prove difficult.

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.