2015 Economic Calendar
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Industrial Production  
Released On 12/16/2015 9:15:00 AM For Nov, 2015
PriorPrior RevisedConsensusConsensus RangeActual
Production - M/M change-0.2 %-0.4 %-0.2 %-0.6 % to 0.3 %-0.6 %
Manufacturing - M/M0.4 %0.3 %0.1 %-0.3 % to 0.3 %0.0 %
Capacity Utilization Rate - Level77.5 %77.4 %77.0 % to 77.6 %77.0 %

Highlights
November was another weak month for the industrial economy, in part reflecting unusually warm temperatures that are driving down utility output. Industrial production came in at the Econoday low forecast, down a very sharp 0.6 percent in November. This is the biggest drop in 3-1/2 years. Utility output fell a monthly 4.3 percent after falling 2.8 percent in October. Mining, reflecting low commodity prices and contraction in energy extraction, has also been week, down 1.1 percent for a third straight decline.

This brings us to the most important component, manufacturing where October's 0.3 percent bounce higher (revised downward from 0.4 percent) now unfortunately looks like an outlier. Manufacturing production came in unchanged in November reflecting weakness in motor vehicles, down 1.0 percent in the month, and also a dip back for construction supplies which fell 0.2 percent after a weather-related surge of 2.3 percent in October. One positive is a slight snapback for business equipment which, after declines in the two prior months, rose 0.2 percent.

All the weakness is pulling down capacity utilization, to 77.0 percent in November for a heavy 5 tenths dip. Utilization is running more than 3 percentage points below its long-term average. Mining utilization is now under 80 percent, down 1.1 points in the month to 79.4 percent. Utility utilization fell 3.4 points in the month to 74.5 percent with manufacturing utilization down 1 tenth to 76.2 percent. Excess capacity, though not cited as a major factor behind the lack of inflation in the economy, does hold down the cost of goods.

Year-on-year rates confirm the weakness, down 1.2 percent overall with utilities down 7.6 percent and mining down 8.2 percent. Manufacturing is in the plus column but not by much at plus 0.9 percent.

Weather factors are skewing utility output but otherwise, readings are fundamentally soft and reflect the downturn in global demand made more severe for U.S. producers by strength in the dollar.

(Note that the traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.)

Recent History Of This Indicator
Down 0.2 percent, industrial production was weak in October but not the manufacturing component where production, boosted by strong demand for construction supplies, rose a solid 0.4 percent to end two prior months of decline and offering rare good news for a sector that has been hurt by weak exports. The warm weather here in the U.S. is behind the strength in construction supplies and also behind a big dip in utility output which is what pulled down the October headline. And more of the same is expected for November with the Econoday consensus at minus 0.2 percent for the headline but up 0.1 percent for manufacturing.

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]
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]
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
 

2015 Release Schedule
Released On: 1/162/183/164/155/156/157/158/149/1510/1611/1712/16
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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