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Monday, January 17, 2011

USA Industrial Production at 28-Month High! (Charts) *16th monthly increase in past 18 months*

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization


USA Industrial Production at 28-Month High!

Official Statement by the Federal Reserve (January 14, 2011) Industrial production increased 0.8 percent in December after having risen 0.3 percent in November. The rate of change for industrial production was revised down in November but revised up in September and October; the net effect of the revisions from July to November left the level of industrial production in November slightly higher than was previously reported. For the fourth quarter as a whole, industrial production increased at an annual rate of 2.4 percent, a slower pace than in the earlier quarters of the year. In the manufacturing sector, output moved up 0.4 percent in December with gains in both durables and nondurables. Excluding motor vehicles and parts, factory output increased 0.5 percent. The output of mines advanced 0.4 percent; the output of utilities surged 4.3 percent, as unusually cold weather boosted the demand for heating. At 94.9 percent of its 2007 average, total industrial production in December was 5.9 percent above its level of a year earlier.

Cycle History The current Industrial Production Index (preliminary) of 94.9 is up +9.4 and +10.9% from the Great Recession cyclical bottom of 85.5 in June 2009. The Index is down -5.8 and -5.8% from the pre-Great Recession cyclical peak of 100.7 in September 2007. Therefore, the current Index is now closer to the cyclical peak than the trough.

Trend The current Industrial Production Index (preliminary) of 94.9 is a post-Great Recession cyclical peak and 28-month high, up +0.80% from November, MoM, and up a strong +5.9% from December 2009, YoY. The Index has increased 16 of the last 18 months, since the cyclical trough in June 2009. The current Index is above the sharply ascending 12-month moving average of 92.7 and has been for 15 consecutive months. The current Index is above the now ascending 24-month moving average of 90.2 and has been for 9 consecutive months. The current Index is above the sharply descending 36-month moving average of 92.4 and has been for 6 consecutive months. (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 40 months (3+ years) of the Industrial Production Index from the pre-Great Recession cyclical peak of 100.7 in September 2007 through the latest month reported, December 2010 of 94.9. As can be seen, the Index bottomed in June 2009 at 85.5 and has generally ascended through December 2010 to a post-Great Recession cyclical peak and 28-month high.



Commentary The Federal Reserve revised the past few months of data but the changes were immaterial and to the upside. The December Industrial Production Index of 94.9 is a strong increase, a 28-month high, and a post-Great Recession cyclical peak, which is very encouraging. The Index has remained above 93 since July 2010, 6 consecutive months, and now above 94 for 2 consecutive months. Previously, the Index had been below 93 for 20 consecutive months (November 2008 through June 2010).


USA Capacity Utilization Rate at 28-Month High!

Official Statement by the Federal Reserve The capacity utilization rate for total industry rose to 76.0 percent, a rate 4.6 percentage points below its average from 1972 to 2009.

Cycle History The current Capacity Utilization Rate (preliminary) of 76.0 is up +7.8 and +11.4% from the Great Recession cyclical bottom of 68.2 in June 2009. The Index is down -5.7 and -7.0% from the pre-Great Recession cyclical peak of 81.7 in April 2007. Therefore, the current Index is now closer to the cyclical peak than trough.

Trend The current Capacity Utilization Rate (preliminary) of 76.0 is a post-Great Recession cyclical peak and 28-month high, up +0.81% from November, MoM, and up a strong +6.2% from December 2009, YoY. The Rate has increased 17 of the last 18 months, since the cyclical trough in June 2009. The current Rate is above the strongly ascending 12-month moving average of 74.2 and has been for 15 consecutive months. The current Rate is above the now ascending 24-month moving average of 72.1 and has been for 9 consecutive months. The current Rate is above the descending 36-month moving average of 74.1 and has been for 5 consecutive months. (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 45 months (3.5+ years) of the Capacity Utilization Rate from the pre-Great Recession cyclical peak of 81.7 in April 2007 through the latest month reported, December 2010 of 75.9. As can be seen, the Rate bottomed in June 2009 at 68.2 and has generally ascended through December 2010 to a post-Great Recession peak. and 28-month high.


Commentary The commentary is basically the same as the Industrial Production Index above. The Federal Reserve revised the past few months of data but the changes were immaterial and to the upside. The December Utilization Rate of 75.9 is a good increase, a 28-month high, and a post-Great Recession cyclical peak, which is very encouraging.


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