Tuesday, November 17, 2015
Industrial production: oil patch down, manufacturing at new high
- by New Deal democrat
You will probably read some commentary from the usual suspects about how yet another negative industrial production number means that We Are DOOMED!
But it looks rather different when we take out the Oil Patch. Below is a graph of overall industrial production (blue), manufacturing production (red), and mining production (green), all normed to 100 as of last December:
Yes, industrial production as a whole is showing a shallow recession. But, despite the big hit to exports due to the strong US$, manufacturing production made a new all-time high in October. The Oil Patch continues to hurt in a big way, and this is what is bringing down the overall number.
In short, the broader US economy continues to move forward.
UPDATE: Below is a graph of manufacturing employment (red) vs. mining employment (green), both normed to 0 as of last December as well:
Although it has taken a small hit in the last few months, manufacturing employment is still up since last December. Mining, on the other hand, is sucking wind. The net decline has been about -100,000 jobs, or about -10.000 a month. This has not been nearly enough to overcome the continued growth in services employment.
The US is primarily a service economy, and the hit to the Oil Patch is just not enough to take it down.