Econoday Economic Report: Industrial Production April 17, 2012

2012 Economic Calendar

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Industrial Production

Released On 4/17/2012 9:15:00 AM For Mar, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Production - M/M change	0.0 %	0.0 %	0.3 %	-0.2 % to 0.7 %	0.0 %
Capacity Utilization Rate - Level	78.7 %	78.7 %	78.6 %	78.2 % to 79.1 %	78.6 %
Manufacturing - M/M	0.3 %	0.8 %	0.3 %	-0.2 % to 0.5 %	-0.2 %

Highlights
Manufacturing paused in March but followed several strong months. Overall industrial production was unchanged in March after a flat reading the month before (originally no change). Analysts called for a 0.3 percent increase for the latest month.

By major components, manufacturing slipped 0.2 percent, following a 0.8 percent increase in February (previously up 0.3 percent-pre-benchmark). The market consensus expected a 0.5 percent gain for the manufacturing component. For the latest month, utilities output rose 1.5 percent. Mining output firmed 0.2 percent.

The bright spot in the report was for motor vehicles and parts which advanced 0.6 percent, following a 0.8 percent boost in February. Manufacturing excluding motor vehicles dipped 0.3 percent, following a 0.8 percent surge in February.

Overall capacity utilization edged down to 78.6 percent from 78.7 percent in February. The median market forecast was for 78.6 percent.

Manufacturing is in a soft spot but given how strong recent gains have been is not so disconcerting. The first quarter as a whole was quite strong with manufacturing up an annualized 10.4 percent, the largest gain since the second quarter of 2010.

Market Consensus before announcement
Special Note: The Fed released its annual revisions on March 30. The estimate for February overall industrial production remained unrevised at no change while January was nudged up to a 0.5 percent gain compared to the prior estimate of 0.4 percent. Overall capacity utilization for February was bumped down to 78.4 percent from the original estimate of 78.7 percent.

The following reflects the numbers from the monthly report for February, released March 16.

Industrial production in February was unexpectedly soft but due to a drop in mining and flat utilities. Manufacturing rose moderately strong. Overall industrial production was unchanged in February after an upwardly revised 0.4 percent boost the month before. By major components, manufacturing increased 0.3 percent, following a 1.1 percent surge in January. For the latest month, utilities were unchanged after a 2.2 percent drop in January. Mild winter weather has weighed down on utilities output. Meanwhile, mining output declined 1.2 percent, following a 1.6 percent dip the prior month. Overall capacity utilization posted at 78.7 percent versus 78.8 percent in January.

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