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 Increased 0.5% in November
Supporting Image for Blog Post

Implications:  US industrial activity continued to improve in November, following large gains in October as factories came back online after temporary disruptions from Hurricane Ida.  Gains were broad-based in November as well, with nearly every major category posting an increase.  Looking at the details, the manufacturing sector led the headline index higher, rising 0.7%, with both auto and non-auto manufacturing contributing.  Notably, the auto sector posted its first back-to-back gain of 2021, and while it's too early to tell for sure, this may be an early signal that some supply-chain issues like the lack of semiconductors may be beginning to ease.  Meanwhile, activity in the mining sector (think oil rigs in the gulf) rose 0.7% in November as well.  We expect this sector to be a tailwind for overall industrial production in the months ahead as activity still remains 8.2% below pre-pandemic levels and has lagged the recovery elsewhere.  The announcement of the COVID-19 Omicron variant recently sent energy prices tumbling, but we think prices will recover and continue to incentivize oil and gas extraction as the worst initial fears dissipate.  Looking at things more broadly, today's gains put industrial production 1.0% above pre-pandemic levels. This means production still has a long way to go to meet current demand.  For context, yesterday's report on retail sales showed that even after adjusting for inflation, "real" retail sales are up 12.9% over that same time period.  Ongoing issues with supply chains and labor shortages are hampering a more robust rise in activity, with job openings in the manufacturing sector currently at a record high and 150% above pre-pandemic levels.  This mismatch between supply and demand, is why inflation has accelerated so sharply. Normally easy money takes 18-24 months to show up as inflation. As supply chains heal inflation will moderate, but while supply chain issues are transitory, excess M2 growth is not. Look for industrial production to continue bouncing back in the months ahead.  In other recent manufacturing news, the Philadelphia Fed Index, a measure of factory sentiment in that region, fell to +15.4 in December from +39.0 in November. 

Click here for a PDF version
Posted on Thursday, December 16, 2021 @ 11:45 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 professionals 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. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2023 All rights reserved.