November 2018 Industrial Production
Submitted by Atlas Indicators Investment Advisors on December 26th, 2018
Industrial Production surged in November according to the Federal Reserve. Their measure of all physically produced wares jumped 0.6 percent after a downwardly revised count of minus 0.2 percent (originally +0.1 percent). During the past twelve months, this indicator is up 3.9 percent.
The three major industry groups were mixed but biased higher. Mining managed an increase of 1.7 percent; this advance came as a result of rising oil and gas extraction in the period. This latest gain put its year-over-year tally 13.9 percent higher. Utilities were even stronger in the period, surging 3.3 percent, with increases for both electric and gas utilities; another month of unseasonably cold weather helped natural gas distribution as the chill increased demand. Going unchanged in the period, manufacturing was the spoil-sport in the report; durable goods manufacturing rose 0.2 percent, but this was offset by decreases in nondurable manufacturing and other manufacturing (publishing and logging).
Capacity utilization edged higher to 78.5 percent from 78.1 percent in October. Large jumps from the smallest two components offset a modest decline in manufacturing’s utilization. Mining’s utilization jumped 1.0 percent to 94.1 percent and is now seven percentage points above its long-term (1972-2017) average. Utilities surged 2.4 percentage points in November alone, reaching 79.4 percent. However, manufacturing’s utilization declined marginally to 75.7 percent from 75.8 percent which is roughly 2.5 percentage points below its long-run average.
Manufacturing’s weakness is what captured Atlas’ attention in November’s industrial production release. This segment of output tends to follow the contours of the business cycle and has declined in each of the past two iterations of industrial output after being unchanged three months earlier. Once again, the evidence is mounting that growth during the final quarter 2018 slowed compared to the prior period, and we already know that the third quarter was slower than the second.
