Industrial production was a good deal weaker than expected in January. Having seen December's monthly advance trimmed to 1.2 percent, output fell 0.7 percent, some 0.5 percentage points steeper than the market consensus and its fourth decrease in the last five months. However, with base effects strongly positive, annual workday adjusted growth climbed from minus 0.9 percent to 1.4 percent, its first positive print since last August.

The monthly drop was dominated by capital goods which declined fully 2.0 percent. Intermediates also slipped 0.6 percent but there were gains in consumer goods (0.9 percent) and energy (0.1 percent).

Despite January's setback, overall industrial production was 0.1 percent above its level in the fourth quarter and so just about on course to make a positive contribution to quarterly GDP growth. If so, it would be the first time since the third quarter of 2022. To this end, although the ECDI (minus 11) remains below zero, at 14, the ECDI-P shows that overall real economic activity is still running a little head of market expectations. Indeed, this measure has been consistently in positive surprise territory since late-October last year.

Production is seen falling 0.2 percent on the month, only partially reversing December's 1.6 percent bounce.

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.