Thursday, 24 of May of 2018

Economics. Explained.  

Industrial Production

May 16, 2018

Industrial production climbed 0.7% in both March and April.   During the past year industrial production has risen 3.5%.  It has not risen that rapidly in a 12-month period of time since early 2014.

Breaking industrial production down into its three major sub-components,  the Fed indicated that manufacturing production (which represents 75% of the index) rose 0.5% in April after having been unchanged in March. During the past year  factory output has risen 1.8% (red line, right scale).  The factory sector is gathering momentum.

Mining (14%) output rose 1.1% in April after advancing 0.8% in March.  Over the past year mining output has risen 10.6%.  Most of the recent upturn in mining has been concentrated in oil and gas drilling activity.  Oil and gas drilling jumped 3.0% in April after having climbed 4.1% in March and 6.7% in February.     Over the course of the past year oil and gas well drilling has risen 13.1%.  However, in the past three months that figure has climbed to a 57.4% pace.

Utilities output rose 1.9% in April after having jumped 6.1% in March.  During the past year utility output has risen 6.0%.

Production of high tech equipment rose 0.7% in April after having climbed 0.5% in March.  Over the past year high tech has risen 6.2%.   Thus, the high tech sector sector appears to be on a roll. This is an indication that the long slide in nonresidential investment has come to an end which would, in turn, signal an upturn in productivity growth.

Capacity utilization in the manufacturing sector rose 0.3% in April to 75.8% after having declined 0.1% in March.  It is getting close to the 77.4% that is generally regarded as effective peak capacity.  Factory owners are soon going to have to spend more money on technology and re-furbishing or expanding their assembly lines to boost output.

Stephen Slifer


Charleston, SC

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