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 0.7% in April
Posted Under: Data Watch • Industrial Production - Cap Utilization • COVID-19

 
Implications:  Industrial production continued to recover in April, rising for the second month in a row as many factories that were damaged by February's severe winter weather returned to operation.  But, while good news, the production side of the economy still has a way to go.  Yes, both industrial production and manufacturing activity are now up substantially from a year ago, but this is just the result of the big declines we saw last Spring in the early days of the pandemic rolling into the year-ago comparison.  Looking at the overall progress of the recovery versus pre-pandemic levels shows a different story.  Industrial production is not only down 2.7% from February 2020, but is still down 0.5% from January 2021 levels before the winter storm hit in February, as well. That means there continues to be a wide gulf between the production and consumption sides of the US economy, which creates conditions for rising inflation. Meanwhile, ongoing issues with supply chains were also visible in today's report, with the one source of weakness coming from auto production, where output fell 4.3%. According to the Federal Reserve, this is largely the result of the ongoing semiconductor chip shortage that is keeping finished vehicles from rolling off the assembly line.  Notably, manufacturing activity excluding the auto sector rose 0.7% in April and is now back above its pre-winter storm high in January.  Mining activity also continued to recover in April, rising 0.7%, and is likely to be an ongoing tailwind in the months ahead.  Oil prices have now fully recovered to where they were pre-pandemic, and with upward pressure on commodity prices likely to continue as the US begins to reopen, extraction activity has begun to rebound. This is reflected in the number of active oil and gas rigs in operation, which have nearly doubled from the bottom in August of 2020, but still need to double again to get back to pre-pandemic levels.  Look for a continued upward trend in industrial production in the months ahead as reopening continues, supply chain issues are ironed out, and factories continue to ramp up production. 

Click here for a PDF version
Posted on Friday, May 14, 2021 @ 1:16 PM • 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 © 2021 All rights reserved.