2018 Economic Calendar
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Industrial Production  
Released On 10/16/2018 9:15:00 AM For Sep, 2018
PriorPrior RevisedConsensusConsensus RangeActual
Production - M/M change0.4 %0.2 %0.0 % to 0.4 %0.3 %
Manufacturing - M/M0.2 %0.3 %0.2 %0.0 % to 0.3 %0.2 %
Capacity Utilization Rate - Level78.1 %78.2 %77.9 % to 78.3 %78.1 %

Highlights
Industrial production rose a solid 0.3 percent in September with manufacturing production up 0.2 percent. Mining production remains the standout component in the report, up 0.5 percent in the month for a 13.4 percent year-on-year increase. Utility production has also been a solid component though this was unchanged in the month for a year-on-year 5.4 percent increase.

Focusing on manufacturing which makes up nearly 3/4 of all industrial production, this yearly rate is up 3.5 percent. This looks like a modest rate of growth but this report tracks volumes and when adding in the rate of inflation, growth is closer to 6 percent which is strong.

Motor vehicles have been a central strength, jumping 1.7 percent in September for a 7.0 percent on-year rate. Selected hi-tech has also been strong, up 0.6 percent in the month for a yearly 6.9 percent gain.

Other groupings in manufacturing include a 0.2 percent gain for materials where the on-year gain is still a very strong 8.0 percent. Business equipment production, which surged 1.0 percent in August, jumped another 0.8 percent in September with annual growth at 3.6 percent. Consumer goods increased 0.2 percent in September for a yearly 2.5 percent.

Weakness in manufacturing has been in nonindustrial supplies, unchanged in the month for a 2.0 percent annual gain, with the subcomponent of construction supplies, likely reflecting tariff constraints, down 0.6 percent in September but still at 2.4 percent annual growth.

Overall capacity utilization has been tightening but is unchanged at a still moderate 78.1 percent with manufacturing utilization, which also has been on the rise, up 1 tenth to 75.9 percent.

The manufacturing component of this report, even when adding in inflation, has yet to show the double-digit strength of factory orders and shipments nor even a shadow of the strength of small sample surveys like Empire State and ISM. Yet the gains for vehicles, hi-tech and especially business equipment are pluses that do point to positive momentum. And year-on-year growth for overall industrial production is very strong at 5.1 percent. Watch tomorrow for the Philly Fed's October update on manufacturing.

Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.

Consensus Outlook
Utilities and especially mining have been holding up industrial production where growth would otherwise be less strong given relative softness in manufacturing. But the consensus for September industrial production is only a 0.2 percent gain vs 0.4 percent in August with manufacturing also seen rising 0.2 percent. Pressures on capacity utilization are expected to tighten 1 tenth to 78.2 percent.

Definition
The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2012. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2012. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.

The index of industrial production is available nationally by market and industry groupings. The major groupings are comprised of final products (such as consumer goods, business equipment and construction supplies), intermediate products and materials. The industry groupings are manufacturing (further subdivided into durable and nondurable goods), mining and utilities. The capacity utilization rate -- reflecting the resource utilization of the nation's output facilities -- is available for the same market and industry groupings.

Industrial production was also revised to NAICS (North American Industry Classification System) in the early 2000s. Unlike other economic series that lost much historical data prior to 1992, the Federal Reserve Board was able to reconstruct historical data that go back more than 30 years.  Why Investors Care
 
[Chart]
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy.
Data Source: Haver Analytics
 
[Chart]
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.
Data Source: Haver Analytics
 
 

2018 Release Schedule
Released On: 1/172/153/164/175/166/157/178/159/1410/1611/1612/14
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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