Industrial Production: Gains Mostly Driven By Utilities, Overall Trend Solid
November 16, 2017
Bottom Line: Industrial activity rose more than expected in October, and figures for September and August were revised higher. Utility generation with the shift to colder weather in many parts of the country led the October gains. Still, auto production was solid again, bringing the annualized 3-month gains in that sector to 27.5% on the back of hurricane-related replacement buying. Mining output fell modestly while manufacturing output rose again and is 2.5% above its year ago levels. Overall industrial output growth is now growing modestly on a year-over-year basis, faster than the pace of 2016 and sharply better than the contraction seen in 2015.
Industrial Production ROSE by 0.94% in October, compared with market expectations for an increase of 0.5%. Moreover, the prior month was revised from 0.3% up to 0.4%. Output is now 2.9% ABOVE its year ago level.
- In October, Mining Output FELL by 1.3%, and is now 6.5% ABOVE its year ago level.
- Utility Generation ROSE by 2.0% and is now 0.9% ABOVE its year ago level.
- Manufacturing Output ROSE by 1.3% but is now only 2.5% ABOVE its year ago level.
- Output in high-tech industries rose by 1.2%.
- Meanwhile, output in the motor vehicle industry rose by 1.0%. Excluding both the high-tech and motor vehicles industries, industrial output climbed by 1.3%.
Capacity Utilization ROSE by 0.6 points to 77.0%, compared with market expectations for a smaller increase to 76.3%. Moreover, the prior month was revised from 76.0% to 76.4%. Capacity utilization rate is now 1.3 percentage points above its year ago level and 3.0 percentage points below its long-run (1972–2015) average.
Article by Contingent Macro Advisors