Industrial production grew 2.8 percent on the month in September, up 5.5 per cent from August's revised reading. All sectors show an increase, with energy rising the most at 5.4 percent. Capital goods increased 1.4 percent, and intermediate and consumer goods increased 1.3 percent and 1.0 percent, respectively.

Year-over-year, output increased 1.5 percent, up 4.5 percent from August's revised reading and the highest it has been all year. This positive trend was seen in all sectors, with consumer goods increasing 2.3 percent, intermediate goods increasing 1.3 percent, capital goods increasing 0.9 percent, and energy increasing 0.6 percent.

In sum, goods production recovered nicely from August's decline. Year over year production reached a new record high, 0.6 percent more than in July. On average, output decreased 0.5 percent over the last three months. These updates take the RPI to minus 7 and the RPI-P to 13, meaning that the real economy is slightly outperforming market expectations.

The consensus sees industrial production rebounding by 1.5 percent on the month in September but down 0.5 percent on the year. That compares with August’s 2.4 percent decrease on the month and a decline of 2.7 percent on year.

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.