December 2019 Headline Industrial Production Improved But Rolling Averages Declined

The headlines say seasonally adjusted Industrial Production (IP) improved month-over-month. Our analysis shows the three-month rolling average continues to decline.

Analyst Opinion of Industrial Production

There was upward revision to the last month's 6-months of data. The best way to view this is the 3-month rolling averages which declined. Industrial production remains in a short term downtrend.

Manufacturing employment rate of growth is accelerating year-over-year.

(Click on image to enlarge)

  • Headline seasonally adjusted Industrial Production (IP) was up 0.3 % month-over-month and up 4.0 % year-over-year (YoY was published as 3.9 % last month).
  • Econintersect's analysis using the unadjusted data is that IP growth decelerated 0.4 % month-over-month, and is up 3.6 % year-over-year.
  • The unadjusted 3 month rolling average year-over-year rate of growth decelerated 0.7 % from last month, and is up 3.9 % year-over-year.
  • The market was expecting (from Econoday):

IP headline index has three parts - manufacturing, mining and utilities - manufacturing was up 1.1 % this month (up 3.2 % year-over-year), mining up 1.5 % (up 13.4 % year-over-year), and utilities were down 6.3 % (down 4,3 % year-over-year). Note that utilities are 10.8 % of the industrial production index, whilst mining also is 10.8 %.

Comparing Seasonally Adjusted Year-over-Year Change of the Industrial Production Index (blue line) with Components Manufacturing (red line), Utilities (green line), and Mining (orange line)

Unadjusted Industrial Production year-over-year growth for 2 years has been near or below zero - it is currently trending up and in expansion.

Economic downturns have been signaled by only watching the manufacturing portion of Industrial Production. Historically manufacturing year-over-year growth has been negative when a recession is imminent.

Seasonally Adjusted Manufacturing Index of Industrial Production - Year-over-Year Growth

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