Before I get to the (relatively) good news in retail sales, let’s take a look at the bad news from industrial production.

On a monthly basis, production declined -0.3%. Manufacturing declined -0.4%. There were also downward revisions to last month. Both of these continue to slowly fade from their 2022 peak:

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On a YoY basis, production is down -0.6%, and manufacturing production is down -0.4%:

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For all intents and purposes, manufacturing has been in a shallow recession since late 2022, and that recession continues. This is something that has been well telegraphed by both the regional Fed new orders reports as well as the monthly ISM manufacturing report.

The only reason not to be more concerned is that, since the accession of China to regular trade status in 1999, production has stalled on a longer term basis, and there have been several equivalent or worse downturns without any recession having occurred, most notably in 2015-16:

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Still, this is not good news, meaning that the burden is on construction and consumer spending on services to carry the economy forward to avoid recession.

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