Business Cycle Indicators As Of Mid-January 2022

Industrial production comes in below consensus (-0.1% vs. Bloomberg +0.3% m/m). Here are some key indicators followed by the NBER BCDC.

Figure 1: Nonfarm payroll employment (dark blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. NBER defined recession dates, peak-to-trough, shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (1/3/2022 release), NBER, and author’s calculations.

Manufacturing production also missed (-0.3% vs. +0.5% consensus).

Figure 2: Industrial production (red), manufacturing production (blue), manufacturing employment (green), manufacturing aggregate hours for production & nonsupervisory workers (brown), all seasonally adjusted, all in logs 2020M02=0. NBER defined recession dates, peak-to-trough, shaded gray. Source: Federal Reserve Board via FRED, BLS, NBER, and author’s calculations.

The volatile utilities component of IP fell 1.5% m/m, partly offsetting the 2% increase in mining.

Regarding manufacturing, the business equipment category decreased by 0.5%, which is sensitive to capital investment expenditures, possibly signaling a deceleration (possible, because, we don’t knowif it’s supply or demand induced). Automotive parts production was down 1.3% m/m.

Finally, nominal retail sales (ex. food services) undershot as well, -2.3% vs. +0.2% consensus. In real terms:

Figure 3: Manufacturing and Trade Industry Sales, 2012Ch.$ (black), retail sales ex-food services deflated by CPI (red), retail sales ex-food services deflated by PPI for finished goods (teal), all in logs 2020M02=0. NBER defined recession dates, peak-to-trough, shaded gray. Source: Federal Reserve Board via FRED, Census, BLS, NBER, and author’s calculations.

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