The index of industrial production measures the physical output of the nation's factories, mines and utilities. The industrial sector accounts for less than one-fifth of the economy but for most of its cyclical variation. The capacity utilization rate reflects the usage of available resources among factories, utilities and mines. A high and rising operating rate may signal that resources are being utilized to their fullest capacity -- a warning sign of inflationary pressures. Why Investors Care
| Released on 4/16/08 For Mar 2008 | |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Highlights
Industrial production in March surprised on the upside but most of the strength was from a jump in utilities output and also mining. Overall industrial production rebounded 0.3 percent in March, following a 0.7 percent drop the prior month. Industrial production came in above the consensus forecast for a 0.1 percent decrease in March. The manufacturing component also turned back up but with only a modest 0.1 percent rise in the latest month after dropping 0.5 percent in February. Utilities output jumped 1.9 percent in March while mining output also came in strong with a 0.9 percent gain. Basically, headline production overstates underlying strength but manufacturing is holding its own with the small March gain.
Manufacturing was mixed by industry. In the latest month, notable gains were seen in wood products, computers & electronics, electrical equipment, food & tobacco products, and paper. Significant declines showed up in primary metals, motor vehicles, petroleum products, and rubber & plastics.
On a year-on-year basis, industrial production in March posted a 1.6 percent increase.
Overall capacity utilization rose to 80.5 percent in the most recent month from 80.3 percent in February and compared to the market expectation of 80.3 percent.
Today's report overstates strength in the industrial sector with the March gain almost entirely due to large gains in utilities and in mining. But the truly good news is that manufacturing did squeeze out a modest rebound - indicating that this sector is not in freefall but just sluggish. The news should support equities but cause interest rates to firm.
Industrial production has recently joined housing as a sector in contraction. Overall industrial production dropped 0.5 percent in February, following a 0.1 percent gain the month before. The manufacturing component declined 0.2 percent in the latest month while utilities output dropped 3.7 percent and mining output rose 0.4 percent. The outlook for March production is not good as new factory orders have fallen the last two months, declining in January and February by 2.3 percent and 1.3 percent, respectively. Also, the March employment report showed manufacturing production hours falling by 1.0 percent for the month.
Industrial production Consensus Forecast for March: -0.1 percent
Range: -0.6 to +0.3 percent
Capacity utilization Consensus Forecast for March 08: 80.3 percent
Range: 79.9 to 80.7 percent
![[Chart]](chart.gif)
|
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy. |
![[Chart]](chart_1.gif)
|
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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}