Tuesday, September 15, 2015

Don't sweat industrial production

 - by New Deal democrat

When CNBC breathlessly reported industrial production this morning, it was with words to the effect that it was "the biggest decline in almost two years," On the contrary, while it supports the idea that the US is in a "shallow industrial recession," it does nothing to suggest that there are broader problems.

In the first place, with last month revised upward by +0.3, the net loss is only -0.1.  Secondly, as shown by the graph below, we have improved off of this spring's readings, although there certainly remains a slight downtrend from last fall:

More importantly, when we decompose the number into manufacturing (blue in the graph below) and mining (red):

we see that manufacturing remains in an uptrend.  The big decrease is mining, i.e., it is all about the Oil patch.  (Production by utilities was up this month).

In short, not great, but not too shabby either.

P.S.  I'll waith to comment on the retail sales number until I see this months's CPI.