2018 Economic Calendar
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Industrial Production  
Released On 6/15/2018 9:15:00 AM For May, 2018
PriorPrior RevisedConsensusConsensus RangeActual
Production - M/M change0.7 %0.9 %0.1 %-0.6 % to 0.5 %-0.1 %
Manufacturing - M/M0.5 %0.6 %0.1 %-0.8 % to 0.4 %-0.7 %
Capacity Utilization Rate - Level78.0 %78.1 %78.0 %77.4 % to 78.3 %77.9 %

Highlights
A big drop in autos skewed industrial production lower in May, slipping 0.1 percent and missing what was an already soft consensus by 2 tenths. Manufacturing volumes fell a very steep 0.7 percent, pulled down by a 6.5 percent monthly drop in motor vehicles that itself reflected the effects of a fire early in the month at a supplier in Michigan.

Yet readings outside autos are also soft with hi-tech production up only 0.2 percent and production of business equipment down 1.1 percent. Excluding autos, manufacturing production fell 0.2 percent in the month. The manufacturing component of this report never really has shown the kind of strength being posted by factory shipments or factory orders. Also of note, production of primary metals, the subject of import tariffs, shows a second straight sharp decline.

Manufacturing makes up the great bulk of industrial production and once again is overshadowing another standout month for mining which surged 1.8 percent. Year-on-year mining production is up 12.6 percent vs only a 1.7 percent rate for manufacturing. Utility production has been mixed, up 1.1 percent in May for 4.0 percent yearly growth.

Capacity utilization is over 90 percent for mining at 92.4 percent vs 79.4 percent for utilities and 75.3 percent for manufacturing. Utilization overall, down 2 tenths to 77.9 percent, is not extreme and points to available slack in the industrial sector.

Putting mining and utilities aside, industrial production is once again an anomaly, not pointing as other reports to building strength and a rising tempo for the nation's factory sector.

Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.

Consensus Outlook
Held down by manufacturing, industrial production is expected to rise only 0.1 percent in May. The report's manufacturing component, which dominates the weighting in this series, is also expected to inch only 0.1 percent higher in line with weakness in factory hours in the May employment report. The mining component has been showing great strength with utility output the last two reports also a positive. Pressures on capacity utilization are expected to hold steady at 78.0 percent.

Definition
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
 
[Chart]
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
 
[Chart]
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
 
 

2018 Release Schedule
Released On: 1/172/153/164/175/166/157/178/159/1410/1611/1612/14
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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