2009 Economic Calendar
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Industrial Production  
Released On 4/15/2009 9:15:00 AM For Mar, 2009
PriorConsensusConsensus RangeActual
Production - M/M change-1.4 %-0.8 %-1.5 % to -0.5 %-1.5 %
Capacity Utilization Rate - Level70.9 %70.0 %69.2 % to 70.3 %69.3 %

Industrial production in March dropped sharply and significantly more than expected. Overall industrial production fell 1.5 percent, matching the decline in February. The latest contraction was worse than the market forecast for a 0.8 percent drop. The manufacturing component fell 1.7 percent, following a 0.6 percent decrease the month before. Declines were broad-based with the exception of motor vehicles, which advanced slightly.

For the other major nonmanufacturing components, utilities in March rebounded 1.8 percent while mining output plunged 3.2 percent. The drop in mining was due to declines in oil and gas well drilling. Manufacturing clearly is taking a hit from a fall in demand in the U.S. and overseas while oil and gas drilling is hurting from lower oil and gas prices making drilling less profitable.

The freefall in industrial production has led to both closing of plants and running assembly lines at a much slower pace. Overall capacity utilization in March continued its downtrend, dropping to 69.3 percent from 70.3 percent in February. The March number was lower than the market forecast for 70.0 percent and set an historical low for this series which goes back to 1967.

On a year-on-year basis, industrial production in March slipped further to down 12.8 percent from down 11.8 percent the prior month. The March year-ago decline is the weakest since a 16.0 percent drop for July 1946.

Manufacturing clearly is taking a hit from a fall in demand in the U.S. and overseas. Today's industrial production report adds to the argument that first quarter GDP growth is going to be quite negative.

The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.

Consensus Outlook
Industrial production posted its fourth consecutive decline in February, dropping 1.4 percent in February, following a 1.9 percent fall in January. But the headline number for February was pulled down heavily by a massive 7.7 percent drop in utilities output due to above average winter temperatures. The manufacturing component fell 0.7 percent after a 2.7 percent drop in January. But manufacturing was bolstered by the return of auto assemblies. Looking ahead, outside of a likely rebound in utilities output, industrial production is likely to post another drop in March. More recent manufacturing surveys have been deeply negative and production worker hours in manufacturing fell 2.1 percent in March.

The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2012. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2012. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.

The index of industrial production is available nationally by market and industry groupings. The major groupings are comprised of final products (such as consumer goods, business equipment and construction supplies), intermediate products and materials. The industry groupings are manufacturing (further subdivided into durable and nondurable goods), mining and utilities. The capacity utilization rate -- reflecting the resource utilization of the nation's output facilities -- is available for the same market and industry groupings.

Industrial production was also revised to NAICS (North American Industry Classification System) in the early 2000s. Unlike other economic series that lost much historical data prior to 1992, the Federal Reserve Board was able to reconstruct historical data that go back more than 30 years.  Why Investors Care
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy.
Data Source: Haver Analytics
The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent.
Data Source: Haver Analytics

2009 Release Schedule
Released On: 1/162/183/164/155/156/167/158/149/1610/1611/1712/15
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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