Manufacturing production slipped in October, falling 0.1 percent from September on a pullback in the output of machinery and equipment. Compared to a year ago, output is up 1.1 percent.

Machinery and equipment output fell 2.2 percent in October, with all subcomponents declining month-on-month. The manufacture of transportation equipment saw a 0.1 percent increase month-on-month following a 5.3 percent increase in September, as performance in sub-sectors offset each other. While other transportation rose 2.4 percent, it declined 4.0 percent for motor vehicles and trailers.

Energy production increased 2.0 percent compared to September when it rose a more modest 0.2 percent. Among other major sectors, capital goods output fell 1.2 percent in October after a 1.6 percent increase the previous month. Consumer durables production fell 0.5 percent after a robust gain of 4.3 percent the month before. At the same time, intermediate goods output rose 0.2 percent and that of consumer non-durables was 1.0 percent higher than the previous month.

With no robust order intake, manufacturers have been working through inventories and no considerable expansion is evident. Production numbers can be volatile month-to-month, and looking at a three-month comparison, manufacturing output is only up 0.2 percent compared to the previous three months.

While separate surveys have shown manufacturers to be more optimistic about future developments, that has so far not been reflected in new orders. Absent that, an increase in output is illusory at this point.

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.