FR: Industrial Production

Fri Nov 10 01:45:00 CST 2017

Consensus Actual Previous Revised
Month over Month 0.5% 0.6% -0.3% -0.2%
Year over Year 3.2% 1.1% 1.0%

Goods production (ex-construction) recovered in September. Following a marginally smaller revised 0.2 percent monthly fall in August, output rose a much as expected 0.6 percent to lift annual growth from 1.0 percent to 3.2 percent.

September's rebound was led by the other manufactured goods category where production climbed a monthly 1.7 percent. Refining (0.4 percent), food and agriculture (0.3 percent) and electronics and machinery (0.1 percent) all made ground too but the other main boost came from energy and extracted goods (1.8 percent). Still, manufacturing was up 0.4 percent and so more than reversed August's 0.3 percent decline. However, construction contracted 0.6 percent.

Today's data put third quarter industrial production and manufacturing output 0.6 percent above their respective levels in the second quarter. The October manufacturing PMI (56.1) suggested a good start to the current quarter and expanding order books suggest that this momentum should be carried forward into early 2018.

Industrial production measures the physical output of the nation's factories, mines and utilities. Manufacturing is seen as the best guide to underlying developments as some sectors can be very volatile and cause misleadingly large short-term swings in total industrial 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 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. 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.