Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Industrial Production Declined 0.6% in January
Posted Under: Data Watch • Industrial Production - Cap Utilization

 

Implications:  Industrial production started 2019 on a disappointing note, falling unexpectedly to post the first decline in eight months.  However, there are a couple reasons why you should take today's report with a grain of salt.  First, the details show that most of the decline in the overall index was due to an 8.8% drop in the volatile auto sector, which is now down 0.7% from a year ago.  By contrast, non-auto manufacturing declined a more modest 0.3% in January and remains up 3.1% versus a year ago.  Second, today's report on industrial production is in sharp contrast with the January reading on the ISM manufacturing index from earlier this month, which rebounded on strength in the new orders and production indices, which posted their largest monthly gains since 2014 and 2010, respectively.  It is too soon to tell which report will be right, but for the time being any talk of a sharp slowdown in the factory sector is too early and making too much of one month's data.  In the past year, the various capital goods indices continue to show healthy growth with business equipment up 3.8%, machinery up 5.1%, and high-tech equipment up 6.5%.  Comparing this with the slower year-over-year growth of 2.4% for nondurable goods and 2.8% for manufacturing as a whole demonstrates that capital goods production remains a valuable source of strength in the sector.  In turn, more capital goods should help push productivity growth higher, making it easier for the economy to grow in spite of a tight labor market.  Looking outside the manufacturing sector, mining activity grew for the twelfth month in a row in January and is now up 15.3% in the past year.  Finally, utilities rose 0.4% in January, rebounding as things returned toward normal after unseasonably warm weather in much of the country reduced demand for heating in December.  In other news this morning, the Empire State Index, which measures factory sentiment in the New York region, rebounded to 8.8 in February from 3.9 in January, signaling rising optimism.  On the inflation front, import prices declined 0.5% in January, while export prices fell 0.6%. In the past year, import prices are now down 1.7%, while export prices are down 0.2%.  Expect these figures to rebound soon in response to the turnaround in oil prices as well as a deal with China on some of our trade issues.

Click here for PDF version

Posted on Friday, February 15, 2019 @ 10:57 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.