February 2018 Industrial Production
Submitted by Atlas Indicators Investment Advisors on March 26th, 2018
America’s output of physically made goods improved in February 2018 according to the Federal Reserve. Rising 1.1 percent, Industrial Production made up for all the downwardly revised decline of 0.3 percent (originally minus 0.1 percent) in January. Year-over-year, this cyclically sensitive indicator increased 4.4 percent.
Two of the three major industry groups improved. Manufacturing (the largest component) rose 1.2 percent, following a setback of 0.2 percent in January; durable goods led this improvement (rising 1.8 percent) while nondurables increased as well (up 0.7 percent). Mining surged 4.3 percent, more than reversing its decline a month earlier; coal mining, as well as oil and gas extraction, was strong. During the past year, oil and gas extraction increased 12.0 percent and is now at its highest level ever. Utilities were the big loser in February, collapsing 4.7 percent as warmer than normal temperatures reduced the demand for heating.
Capacity utilization climbed to its highest reading since January 2015. Despite the uptick of 0.7 percent to 78.1 percent, this ratio of use-to-potential is 1.7 percentage points below its long-run (1972-2017) average.
Industrial production is another indicator starting to push against the deceleration narrative established in the last couple of months. It is an important one too because it tends to move along the contours of the business cycle. More evidence is needed before Atlas concludes a renewed acceleration is occurring, but this release helps the argument.
