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Wednesday, February 16, 2011

USA Industrial Production Dips in January (Charts) *Just below December post-recession high*

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization


USA Industrial Production Dips in January

Official Statement by the Federal Reserve (February 16, 2011) Industrial production decreased 0.1 percent in January 2011 after having risen 1.2 percent in December. In the manufacturing sector, output increased 0.3 percent in January after an upwardly revised gain of 0.9 percent in December. Excluding motor vehicles and parts, factory production rose 0.1 percent in January. The output of utilities fell 1.6 percent in January, as temperatures moved closer to normal after unseasonably cold weather boosted the demand for heating in December; the output of utilities advanced 4.1 percent in that month. In January, the output of mines declined 0.7 percent. At 95.1 percent of its 2007 average, total industrial production in January was 5.2 percent above its level of a year earlier.

Cycle History The current Industrial Production Index (preliminary) of 95.1 is up +9.45 and +11.0% from the Great Recession cyclical bottom of 85.5 in June 2009. The Index is down -5.56 and -5.56% 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 95.1 is just below the December 2010 Post-Great Recession cyclical peak and 89-month high of 95.2 (revised). The Index is down -0.1% and -0.06% MoM from December and up +5.2% from January 2010, YoY. The Index has increased 16 of the last 19 months, since the cyclical trough in June 2009. The current Index continues above the sharply ascending 12-month moving average of 93.1 and has been for 16 consecutive months. The current Index continues above the ascending 24-month moving average of 90.5 and has been for 10 consecutive months. The current Index is above the sharply descending 36-month moving average of 92.2 and has been for 7 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 41 months of the Industrial Production Index from the Pre-Great Recession cyclical peak of 100.7 in September 2007 through the latest month reported, January 2011 of 95.1. As can be seen, the Index bottomed in June 2009 at 85.5 and has generally ascended through January 2011, including a Post-Great Recession cyclical peak and 28-month high in December 2010 of 95.2.


Commentary The Federal Reserve revised the past few months of data but the changes were immaterial and to the upside. The January Industrial Production Index of 95.1 is down slightly -0.1 from December but still at a very high reading. Therefore, the dip is not too disappointing. December 2010 was revised upwards from 94.9 to 95.2 and January 2011 preliminary is 95.1. The December 2010 Index of 95.2 continues as the Post-Great Recession cyclical peak and a 28-month high, which is very encouraging. The Index has remained above 93 since July 2010, for 7 consecutive months, and now above 94 for 3 consecutive months. Previously, the Index had been below 93 for 20 consecutive months (November 2008 through June 2010).


USA Capacity Utilization Rate Dips in January

Official Statement by the Federal Reserve (February 16, 2011) The capacity utilization rate for total industry edged down to 76.1 percent, a rate 4.4 percentage points below its average from 1972 to 2010.

Capacity Utilization Rate (Chart) Below is a chart of the latest 46 months of the Capacity Utilization Rate from the Pre-Great Recession cyclical peak of 81.7 in April 2007 through the latest month reported, January 2011 of 76.1. As can be seen, the Rate bottomed in June 2009 at 68.2 and has generally ascended through January 2011, including Post-Great Recession peak. and 28-month high in December 2010 of 76.2. Capacity Utilization generally has a positive correlation with the Industrial Production Index so further analysis and commentary are unnecessary.




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