IT: Industrial Production

Wed Dec 13 03:00:00 CST 2017

Consensus Actual Previous Revised
Month over Month 0.6% 0.5% -1.3%
Year over Year 3.1% 2.4% 2.2%

Goods production (ex-construction) broadly matched expectations in October. Following an unrevised 1.3 percent monthly fall in September, output rose 0.5 percent to lift workday adjusted annual growth from 2.2 percent to 3.1 percent.

The monthly headline advance was led by the energy sector where production expanded fully 1.7 percent. However, intermediates gained a healthy 1.0 percent, albeit after a 3.1 percent nosedive in September, and capital goods were up 0.7 percent following a 2.1 percent contraction. However, consumer goods were only flat as a rise in non-durables was offset by a decline in durables.

The latest figures leave the level of industrial production in October unchanged from its third quarter average when it increased a solid 1.4 percent versus the April-June. The deceleration here inevitably raises the risk of slower GDP growth in the fourth quarter. That said, the November manufacturing PMI survey found the sharpest increase in new orders in more than seventeen years so near-term prospects would seem sound enough and November/December output should extend October's gain.

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.