Econoday Economic Report: Industrial Production February 15, 2012

2012 Economic Calendar

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Industrial Production

Released On 2/15/2012 9:15:00 AM For Jan, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Production - M/M change	0.4 %	1.0 %	0.7 %	0.3 % to 1.2 %	0.0 %
Capacity Utilization Rate - Level	78.1 %	78.6 %	78.6 %	78.2 % to 79.0 %	78.5 %
Manufacturing - M/M	0.9 %	1.5 %	1.0 %	0.6 % to 1.5 %	0.7 %

Highlights
Industrial production in January was unexpectedly soft but due to weakness in mining and utilities. The manufacturing component was robust. Overall industrial production was unchanged in January after a 1.0 percent jump the month before (originally up 0.4 percent). The January figure was well below the consensus forecast for a 0.7 percent gain. By major components, manufacturing jumped 0.7 percent, following a 1.5 percent comeback in December. Analysts projected a 1.0 percent spike for the manufacturing component in the latest month. In January, utilities dropped 2.5 percent while mining output declined 1.8 percent.

Within manufacturing, durable goods advanced 1.8 percent in January. The output of motor vehicles and parts surged 6.8 percent following an upwardly revised increase of 3.8 percent in December. In January, gains of more than 1.0 percent were recorded for fabricated metal products; machinery; computer and electronic products; electrical equipment, appliances, and components; furniture and related products; and miscellaneous manufacturing.

Nondurable manufacturing declined 0.2 percent in January after having advanced 1.5 percent in December.

Manufacturing excluding motor vehicles advanced 0.3 percent, following a 1.3 percent boost in December.

Overall capacity utilization nudged down to 78.5 percent from 78.6 percent in December. The consensus forecast called for 78.6 percent.

With today's strong Empire State report and healthy manufacturing component in industrial production, it looks like manufacturing is supporting first quarter overall growth in the economy.

The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.

Market Consensus before announcement
Industrial production in December rebounded 0.4 percent after dipping 0.3 percent in November. Importantly, the key manufacturing component made a 0.9 percent comeback, following a 0.4 percent drop in November. In December, utilities fell 2.7 percent while mining output expanded 0.3 percent. Overall capacity utilization rebounded to 78.1 percent from 77.8 percent for November.

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

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

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

2012 Release Schedule

Released On: 1/18 2/15 3/16 4/17 5/16 6/15 7/17 8/15 9/14 10/16 11/16 12/14

Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

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Actual Data Source: Haver Analytics