Econoday Economic Report: Industrial Production May 16, 2012

2012 Economic Calendar

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Industrial Production

Released On 5/16/2012 9:15:00 AM For Apr, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Production - M/M change	0.0 %	-0.6 %	0.5 %	0.0 % to 0.9 %	1.1 %
Capacity Utilization Rate - Level	78.6 %	78.4 %	79.0 %	78.6 % to 79.2 %	79.2 %
Manufacturing - M/M	-0.2 %	-0.5 %	0.7 %	0.2 % to 0.8 %	0.6 %

Highlights
Industrial production picked up some steam again in April. While utilities played a key role, manufacturing made a nice rebound. Overall industrial production jumped 1.1 percent, following a decline of 0.6 percent in March (originally no change). Market expectations were for a 0.5 percent increase.

By major components, manufacturing rebounded 0.6 percent, following a 0.5 percent decrease in March (previously down 0.2 percent). Analysts forecast a 0.7 percent boost for the manufacturing component. Motor vehicles led manufacturing with a 3.9 percent monthly surge after a 1.2 percent rise in March. Still, manufacturing excluding motor vehicles gained 0.3 percent, following a 0.6 percent dip the month before.

In April, utilities output jumped 4.5 percent. Atypically warm weather held down utilities output in the first quarter and April's number reflects a return to a normal trend. Mining output increased 1.6 percent.

Overall capacity utilization improved to 79.2 percent from 78.4 percent in March. The market forecast was for 79.0 percent.

Despite concern from some regional surveys, manufacturing is doing well in April. The latest numbers are more evidence that the recovery is slowly strengthening.

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

Market Consensus before announcement
Industrial production was unchanged in March after a flat reading the month before. By major components, manufacturing slipped 0.2 percent, following a 0.8 percent increase in February. 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. Overall capacity utilization edged down to 78.6 percent from 78.7 percent in February.

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