Thursday, April 15, 2010

Industrial Production- 04.15.10

Industrial production rose in March but fell sharply below expectations-but the shortfall was utilities related. Overall industrial production in March edged up 0.1 percent after gaining 0.3 percent the month before. The consensus had forecast a 0.8 percent boost for the month.

However, the manufacturing component was notably strong with a 0.9 percent jump, after advancing 0.2 percent in February. For the other major components, utilities output plunged 6.4 percent after no change the prior month while mining production increased 2.3 percent after rising 1.7 percent in February.

Within manufacturing, durables output jumped a sharp 1.4 percent with all major categories advancing, most over 1 percent. Nondurables production increased 0.5 percent in March, led by a 3.0 percent jump in petroleum & coal products and by a 1.7 percent gain in rubber products. Other increases were more moderate but still widespread.

On a year-on-year basis, industrial production rose to 4.0 percent from 2.2 percent in February.

Capacity utilization is gaining ground as it expanded to 73.2 percent from 73.0 percent the month before. The latest number came in a little below analysts' forecasts for 73.4 percent.

Despite the headline disappointment, the manufacturing sector remains robust-especially taking into account a healthy boost in the April Empire State manufacturing index earlier this morning. Markets had conflicting data to digest this morning with weak headline industrial production, a strong Empire number, and an unexpected jump in initial jobless claims. Given that special factors likely kept production and claims weak, markets should look past headline numbers. But heading into the open of U.S. markets, that is not the case with equity futures down.

The Capacity Utilization Rate continues to increase, which means more factories are being utilized for manufacturing on a monthly basis. Let's see if the CUR can't edge up to 75 /76 by June. Also, I am pleased to see a strong increase in durables output this month. Maybe this can be linked to the recent success of U.S. automakers Ford and General Motors? As expected, equities did not have much of a reaction to this mediocre report. No reason to be bullish based on these results.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

1 comment:

  1. like i always say... good economy does not translate into good financial markets! always have to keep that one in mind.

    i know ford has been relatively decent, anna has been holding some calls on it and its been quite profitable...


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