November 2015 Industrial Production Data Weak

The headlines say seasonally adjusted Industrial Production (IP) declined (the manufacturing portion of this index was unchanged month-over-month). Consider this a soft data point that was slightly worse than expected. Our analysis is slightly better than the headline view.

Headline seasonally adjusted Industrial Production (IP) decreased 0.6 % month-over-month and down 1.2 % year-over-year.

Econintersect‘s analysis using the unadjusted data is that IP growthdecelerated 0.2 % month-over-month, and is up 0.9 % year-over-year.

The unadjusted year-over-year rate of growth decelerated 0.5 % from last month using a three month rolling average, and is up 0.9 % year-over-year.

The market was expecting (from Bloomberg):

Headline Seasonally Adjusted Consensus Range Consensus Actual IP (month over month change) -0.6 % to 0.3 % -0.2 % -0.6 % Capacity Utilization 77.0 % to 77.6 % 77.4 % 77.0 % IP Subindex Manufacturing (month over month change) -0.3 % to 0.3 % +0.1 % +0.0 %

IP headline index has three parts – manufacturing, mining and utilities – manufacturing was unchanged this month (up 0.9 % year-over-year), mining down1.1 % (down 8.2 % year-over-year), and utilities were down 4.3 % (down 7.6 % year-over-year). Note that utilities are 10.6 % of the industrial production index, whilst mining is 15.5 %.

Comparing Seasonally Adjusted Year-over-Year Change of the Industrial Production Index (blue line) with Components Manufacturing (red line), Utilities (green line), and Mining (orange line)

Unadjusted Industrial Production year-over-year growth for the past 2 years has been between 2% and 4% – it is currently 0.5 %. It is interesting that the unadjusted data is giving a smooth trend line.

Year-over-Year Change Total Industrial Production – Unadjusted (blue line) and the Unadjusted 3 month rolling average (red line)