October 18, 2016

September Industrial Production: Weak Again; Three Prior Months Revised Down

Filed under: Economy,Taxes & Government — Tom @ 8:59 am

From the Federal Reserve (paragraph breaks and bolds added by me):

Industrial production edged up 0.1 percent in September after falling 0.5 percent in August. For the third quarter as a whole, industrial production rose at an annual rate of 1.8 percent for its first quarterly increase since the third quarter of 2015.

Manufacturing output increased 0.2 percent in September and moved up at an annual rate of 0.9 percent in the third quarter. In September, the index for utilities declined 1.0 percent; mining posted a gain of 0.4 percent, which partially reversed its August decline.

At 104.2 percent of its 2012 average, total industrial production in September was 1.0 percent lower than its year-earlier level. Capacity utilization for the industrial sector edged up 0.1 percentage point in September to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.

Given that the sum of July, August and September is +0.1 points, I’m not sure how the Fed can say that the quarterly increase in production was 1.8 percent. From September of 2015 to September 2016, industrial production has declined by 1.0 percent.

Predictions for September were for a 0.2 percent increase and 75.7 percent utilization (average of two figures at the link).

Additionally, three previous months were written down by 0.1 percent (April, July and August), wiping out September’s increase; last month’s capacity utilization was written down to 75.3 percent from 75.5 percent; and the quarter’s increase in manufacturing was only 1.0 percent.

The year-over-year change in manufacturing is zero, which totally explains why the Institute for Supply Management’s Manufacturing Index has been positive during most of that time (that’s sarcasm, folks).

This report certainly won’t move GDP estimates upward.


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