Financial Controls: USA Industrial Production Index Unchanged in October (Charts) *Manufacturing up, utilities down*

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USA Industrial Production Index at 93.4

USA Industrial Production Index Unchanged in October

Official Statement (Federal Reserve Statistical Release) Industrial production was unchanged in October after having fallen 0.2 percent in September. For the manufacturing sector, output gained 0.5 percent in October after having risen 0.1 percent in September. Factory production in September was initially reported to have decreased 0.2 percent, but incoming data on steel, fabricated metal products, machinery, and chemicals helped boost the index. The output of utilities dropped 3.4 percent in October, as unseasonably warm temperatures reduced demand for heating. Production at mines fell 0.1 percent. At 93.4 percent of its 2007 average, total industrial production in October was 5.3 percent above its year-earlier level.

Cycle History The current Industrial Production Index (preliminary) of 93.4 is up +7.9 and +9.2% from the Great Recession cyclical bottom of 85.5 in June 2009. The Index is down -7.3 and -7.3% from the cyclical peak of 100.7 in September 2007. Therefore, the current Index is mid-range between cyclical peak and trough.

Trend The current Industrial Production Index (preliminary) of 93.4 continues just below the August 2010 short-term and intermediate-term peak 93.5 and has increased 14 of the last 16 months, since the cyclical trough in June 2009. The current Index is above the 12-month moving average of 91.7 and has been for 13 consecutive months. The current Index is above the 24-month moving average of 89.9 and has been for 7 consecutive months. The current Index is above the 36-month moving average of 92.7 and has been for 4 consecutive months. The 12-month moving average is ascending after a cyclical trough of 87.7 in December 2009. The 24-month moving average is leveling off and in October is at a cyclical low. The 36-month moving average continues descending. (The 12-month, 24-month, and 36-month moving averages charts are not shown on this page).

Industrial Production Index (Chart) Below is a chart of the latest 38 months (3+ years) of the Industrial Production Index from the cyclical peak of 100.7 in September 2007 through the latest month reported, October 2010 of 93.4. As can be seen, the Index bottomed in July 2009 at 85.5, ascended through August 2010 to 93.5. The Index has now stayed just below this peak in September and October. The Index indicates USA manufacturing is holding steady but not expanding.

Commentary The October Industrial Production Index of 93.4, unchanged from September, was a little disappointing. However, the Index has remained above 93 since July 2010 and 4 consecutive months (93.3, 93.5, 93.4, and 93.4). Previously, the Index had been below 93 for 20 consecutive months (November 2008 through June 2010.

USA Capacity Utilization Rate Unchanged in October

Official Statement (Federal Reserve Statistical Release) The capacity utilization rate for total industry was flat at 74.8 percent, a rate 6.6 percentage points above the low in June 2009 and 5.8 percentage points below its average from 1972 to 2009.

Cycle History The current Capacity Utilization Rate (preliminary) of 74.8 is up +6.6 and +9.8% from the Great Recession cyclical bottom of 68.2 in June 2009. The Index is down -6.9 and -8.4% from the cyclical peak of 81.7 in April 2007. Therefore, the current Index is approximately mid-range between cyclical peak and trough.

Trend The current Capacity Utilization Rate (preliminary) of 74.8 continues just below the August 2010 short-term and intermediate-term peak 74.9 and has increased 14 of the last 16 months, since the cyclical trough in June 2009. The current Rate is above the 12-month moving average of 73.4 and has been for 13 consecutive months. The current Rate is above the 24-month moving average of 71.9 and has been for 7 consecutive months. The current Rate is above the 36-month moving average of 74.3 and has been for 3 consecutive months. The 12-month moving average is ascending after a cyclical trough of 70.0 in December 2009. The 24-month moving average has leveled off and has been at a cyclical low of 71.9 in August, September, and October 2010. The 36-month moving average continues descending. (The 12-month, 24-month, and 36-month moving averages charts are not shown on this page).

Capacity Utilization Rate (Chart) Below is a chart of the latest 43 months (3+ years) of the Capacity Utilization Rate from the cyclical peak of 81.7 in April 2007 through the latest month reported, October 2010 of 74.8. As can be seen, the Rate bottomed in June 2009 at 68.2, ascended through August 2010 to 74.9. The Rate has now stayed just below this peak in September and October. The Rate indicates USA manufacturing is holding steady but not expanding.

Commentary The conclusion is the same as for the October Industrial Production Index: unchanged from September and a little disappointing. However, the Rate has remained above 74 since May 2010 and 6 consecutive months. Previously, the Rate had been below 74 for 17 consecutive months (December 2008 through April 2010.

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