The headlines say seasonally adjusted Industrial Production (IP) improved in February. Econintersect‘s analysis using the unadjusted data concurs – but adds that the downward revision of the previous months makes this data set less good than what appears at first glance.
- Headline seasonally adjusted Industrial Production (IP) increased 0.6% month-over-month and up 2.8% year-over-year.
- Econintersect‘s analysis using the unadjusted data is that IP growthaccelerated 0.1% month-over-month, and is up 3.2% year-over-year.
- The year-over-year rate of growth has accelerated slightly 0.1% from last month using a three month rolling average. The data has settled down in a tight growth range.
- Industrial production is being affected by large movements in utilities. This is distorting the underlying trends.
- The market was expecting 0.0% to 0.5% month-over-month (consensus 0.3%) versus the headline increase of 0.6%%.
- The seasonally adjusted manufacturing sub-index (which is more representative of economic activity) was up 0.8% month-over-month – and up 1.5% year-over-year .
- Backward revision was moderate and down for the previous 3 months – making is analysis worse than what it would be at first glance.
- Combine that the month-over-month data is comparing a moderately revised downward December data, and the manufacturing portion had a significant decline – makes this report much worse than appears at first glance.
IP headline index has three parts – manufacturing, mining and utilities – manufacturing was up 0.8% this month (up 1.5% year-over-year), mining up 0.3% (up 6.1% year-over-year), and utilities were down 0.2% (up 8.3% year-over-year). Note that utilities are 9.9% of the industrial production index.
