November 2020 Headline Industrial Production Improves But Remains In Contraction

The headlines say seasonally adjusted Industrial Production (IP) improved month-over-month - but remains deep in contraction year-over-year. Our analysis shows the three-month rolling average improved.

Analyst Opinion of Industrial Production

The best way to view this is the 3-month rolling averages which improved.

Industrial production increased 0.4 percent in November. After having fallen 16.5 percent between February and April, the level of the index has risen to about 5 percent below its pre-pandemic (February) reading. In November, manufacturing output advanced 0.8 percent for its seventh consecutive monthly gain. An increase of 5.3 percent for motor vehicles and parts contributed significantly to the gain in factory production; excluding motor vehicles and parts, manufacturing output moved up 0.4 percent. The output of utilities declined 4.3 percent, as warmer-than-usual temperatures reduced the demand for heating. Mining production increased 2.3 percent after decreasing 0.7 percent in October. At 104.0 percent of its 2012 average, total industrial production was 5.5 percent lower in November than it was a year earlier. Capacity utilization for the industrial sector increased 0.3 percentage point in November to 73.3 percent, a rate that is 6.5 percentage points below its long-run (1972-2019) average but 9.1 percentage points above its low in April.

Note that manufacturing is in contraction year-over-year - but capacity utilization shows zero growth year-over-year.

Consider this report slightly worse than last month.

The rate of year-over-year growth for manufacturing employment and manufacturing production correlates.

  • The headline seasonally adjusted Industrial Production (IP) was up 0.4 % month-over-month and down 5.5 % year-over-year (YoY was published as -5.3 % last month).
  • Econintersect's analysis using the unadjusted data is that IP growth showed a deceleration in the rate of growth of 0.6 % month-over-month, and is down 5.7 % year-over-year.
  • The unadjusted 3-month rolling average year-over-year rate of growth accelerated 0.3 % from last month and is down 5.9 % year-over-year.
  • The market was expecting (from Econoday):
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