Industrial production was again a good deal weaker than expected in February. Although January's decline was trimmed by a couple of ticks, a 0.2 percent monthly fall was well wide of the market consensus and means output has now declined in five of the last six months. Moreover, with base effects strongly negative, annual workday adjusted growth slumped from 1.6 percent to minus 2.3 percent, a 3-month low.

The monthly drop reflected a 0.7 percent fall in consumer goods alongside a 0.9 percent decline in capital goods and a 0.3 percent decrease in intermediates. Energy was up 0.2 percent.

However, despite the latest setback, average industrial production in January/February was still 0.1 percent above its mean 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. Even so, the ECDI (minus 25) is now at its second weakest level so far in 2023 and the ECDI-P (minus 5) has also slipped into negative surprise territory.

Production in February is expected to rise 0.5 percent following January's sharper-than-expected 0.7 percent fall.

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.