Tuesday, May 17, 2011

USA Industrial Production Growth Flat in April (Chart) *Decreases 2 of past 3 months*

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization

Official Statement by the Federal Reserve (May 17, 2011) Industrial production was unchanged in April after having increased 0.7 percent in March. Output in February is now estimated to have declined 0.3 percent; previously it was reported to have edged up 0.1 percent. In April, manufacturing production fell 0.4 percent after rising for nine consecutive months. Total motor vehicle assemblies dropped from an annual rate of 9.0 million units in March to 7.9 million units in April, mainly because of parts shortages that resulted from the earthquake in Japan. Excluding motor vehicles and parts, factory production rose 0.2 percent in April. The output of mines advanced 0.8 percent, while the output of utilities increased 1.7 percent. At 93.1 percent of its 2007 average, total industrial production was 5.0 percent above its year-earlier level. The rate of capacity utilization for total industry edged down 0.1 percentage point to 76.9 percent, a rate 3.5 percentage points below its average from 1972 to 2010.

Trend The short-term trend is slightly downwards, with 2 monthly decreases in the last 3 months. The intermediate-term (6 months) and long-term (12 months) trends are upwards, indicating USA industrial production is expanding..

Cycle History The USA Industrial Production Index set a Post-Great Recession peak of 93.11 in March 2011. A Great Recession cyclical low of 83.53 was set in June 2009. A Pre-Great Recession peak was reached of 100.72 in September 2007.

Industrial Production Index (Chart) Below is a chart of the USA Industrial Production Index from the Pre-Great Recession cyclical peak of 100.7 in September 2007 through the latest month reported. After the Great Recession cyclical low of 83.53 in June 2009, USA industrial production increased 15 consecutive months (July 2009 through September 2010). In the 7 months following, there have been 3 monthly decreases and a Post-Great Recession high was set in March 2011 of 93.11.

Commentary Effective with the April 2011 monthly report, amounts were revised back to November 2010 and are reflected in the chart above. The revision changes the narrative for prior posts and reveals weaker expansion in 2011. The April USA Industrial Production Index of 93.097 (preliminary) is just below the Post-Great Recession cyclical peak and a 31-month high of 93.11 in March 2011, which is disappointing and increases concern about the impact high oil prices and a resulting slowdown of economic expansion.

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