| Industrial Production |
|
Released On 1/14/2011 9:15:00 AM For Dec, 2010
|
|
Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Production - M/M change | 0.4 % | | 0.5 % | 0.1 % to 0.8 % | 0.8 % | | Capacity Utilization Rate - Level | 75.2 % | 75.4 % | 75.6 % | 75.1 % to 75.8 % | 76.0 % |
|
|
|
Highlights
The manufacturing sector continues to lead the recovery based on December data-but not quite as strongly as suggested by the headline for industrial production. Industrial production posted a healthy 0.8 percent gain, following a 0.3 percent rebound in November. The December figure came in higher than analysts' estimate for 0.5 percent. However, the boost was led by a monthly 4.3 percent surge in utilities output, following a 1.5 percent increase in November. Utilities were up on atypically cold weather.
Nonetheless, manufacturing increased a healthy 0.4 percent after a 0.3 percent rise in November. The latest was softened by a 0.2 percent dip in motor vehicle output. Excluding autos, manufacturing advanced 0.5 percent after a 0.6 percent boost in November. So, manufacturing is still on a significant uptrend. With motor vehicle sales somewhat strong, auto assemblies are likely to pick back up soon.
For the remaining major industry group, mining rebounded 0.4 percent after declining 0.7 percent in November.
Within manufacturing, industry numbers were mixed but net positive. The output of durable goods rose 0.4 percent while nondurable goods jumped 0.5 percent.
On a year-on-year basis, overall industrial production improved to 5.9 percent from 5.6 percent in November.
Overall capacity utilization continued to improve, rising to 76.0 percent in December from 75.0 percent in November. December's figure beat expectations for 75.6 percent.
The bottom line is that while the utilities component has been volatile and led to swings in the headline production number, manufacturing is on a moderately healthy uptrend and may be supporting hiring soon. Also, the uptrend in capacity utilization is gradually adding to eventual plans for equipment investment.
The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.
|
|
Market Consensus before announcement
Industrial production improved in November, rising 0.4 percent, following a revised 0.2 percent dip the month before. By major components, manufacturing gained 0.3 percent, matching the boost in October. For other major industry groups, utilities output rebounded 1.9 percent while mining edged down 0.1 percent. Within manufacturing, gains were broad based. Overall capacity utilization firmed to 75.2 percent in November from 74.9 percent in October. Looking ahead, production worker hours in manufacturing for December slipped 0.1 percent, suggesting that the manufacturing component of industrial production may be soft. However, recent manufacturing surveys-including ISM, Philly Fed, and New York Fed-have been more positive.
|
Definition
The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.
Why Investors Care
|
| |
![[Chart]](showimage.asp?imageid=20261)
|
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy.
Data Source: Haver Analytics
|
|
| |
![[Chart]](showimage.asp?imageid=20262)
|
The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent.
Data Source: Haver Analytics
|
|
| |
|
| |
|
|
|
| Legal Notices | ©Copyright 1998-2013 Econoday, Inc.
|
powered by
![[Econoday]](images/logo.gif)
|
|
|
