Thursday, March 17, 2011

USA Industrial Production Dips (Charts) *Just below post-recession peak*

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization

USA Industrial Production Dips in February

Official Statement by the Federal Reserve (March 17, 2011) Industrial production declined 0.1 percent in February after having risen 0.3 percent in January; output in January was previously estimated to have edged down 0.1 percent. Manufacturing output increased 0.4 percent in February, and the gain in January was revised up to 0.9 percent. Outside of manufacturing, the output of mines rose 0.8 percent in February, which more than reversed its decline in January. However, the output of utilities fell 4.5 percent--the drop reflected unseasonably warm weather in February, which reduced the demand for heating after two months of unseasonably cold temperatures. At 95.5 percent of its 2007 average, total industrial production was 5.6 percent above its year-earlier level.

Trend The short term upwards trend has stalled but the intermediate and long term trends continue upwards. The current Industrial Production Index (preliminary) of 95.5 is just below the January 2011 Post-Great Recession cyclical peak and 29-month high of 95.6 (revised) and the 3rd consecutive month above 95. The Index has increased 17 of the last 20 months, since the cyclical trough in June 2009. The current Industrial Production Index (preliminary) is:
=> Above the strongly ascending 12-month moving average of 93.6 and has been for 17 consecutive months.
=> Above the strongly ascending 24-month moving average of 90.8 and has been for 11 consecutive months.
=> Above the sharply descending 36-month moving average of 92.1 and has been for 8 consecutive months.
=> (The 12-month, 24-month, and 36-month moving averages charts are not shown on this page).

Cycle History The current Industrial Production Index (preliminary) of 95.5 is up +9.98 and +11.7% from the Great Recession cyclical bottom of 85.5 in June 2009. The Index is down -0.08 and -0.08% from the Post-Great Recession cyclical peak of 95.6 in January 2011. Therefore, the current Index is just below the cyclical peak.

Industrial Production Index (Chart) Below is a chart of the latest 42 months of the Industrial Production Index from the Pre-Great Recession cyclical peak of 100.7 in September 2007 through the latest month reported, February 2011 of 95.5. As can be seen, the Index bottomed in June 2009 at 85.5 and has generally ascended through February 2011, including a Post-Great Recession cyclical peak and 29-month high in January 2011 of 95.6.

Commentary The February Industrial Production Index of 95.5 is down slightly -0.1 from January but still at a very high reading. Therefore, the dip is not too disappointing. The January 2011 Index of 95.6 continues as the Post-Great Recession cyclical peak and a 29-month high, which is very encouraging. The Index has remained above 93 since July 2010, for 8 consecutive months, above 94 since November 2010, for 4 consecutive months, and now above 95 since December 2010, 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 February

Official Statement by the Federal Reserve (March 17, 2011) The capacity utilization rate for total industry edged down 0.1 percentage point to 76.3 percent, a rate 4.2 percentage points below its average from 1972 to 2010.

Capacity Utilization Rate (Chart) Below is a chart of the latest 47 months of the Capacity Utilization Rate from the Pre-Great Recession cyclical peak of 81.7 in April 2007 through the latest month reported, February 2011 of 76.3. As can be seen, the Rate bottomed in June 2009 at 68.2 and has generally ascended through February 2011, including Post-Great Recession peak. and 28-month high in December 2010 of 76.4. Capacity Utilization generally has a positive correlation with the Industrial Production Index so further analysis and commentary are unnecessary.

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