Industrial Production Finally Rises

Since November 2014, industrial production has fallen steadily. There were two brief interruptions when the data series showed an increase. Today we learned that April is the third.

The Federal Reserve said today that industrial production rose by 0.7% last month.

Utilities drove the increase, boosting output by nearly 6% to respond to higher demand for electricity and natural gas. The Fed attributed the jump to a return to normal weather in April after a warmer-than-usual March.

Factory output—the biggest component of overall production and a good measure of the economy’s health—grew 0.3% in April after falling by the same pace in March. Demand for big-ticket items such as machinery and cars picked up last month.

Mining output, meanwhile, fell a sharp 2.3% last month because of persistent woes in the energy and coal sectors.

So is this yet another false start? I suspect not. Instead, the economy is still walking along slowly. The Atlanta GDP forecast for Q2 is now up to 2.8%.

I think it’s interesting that we see this data coming after cyclical stocks started leading the market.

Energy stocks reached their relative performance low on January 20. The Industrials came two days later, and the Materials on January 25.

Posted by on May 17th, 2016 at 1:21 pm

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