- by New Deal democrat
Today’s second report was for industrial production, including its important manufacturing component.
The data for May was mixed, as total production (blue) declined -0.2%, while manufacturing production (red) increased 0.1%
In March I wrote that “I suspect the big increases in February and March in manufacturing, like this morning’s retail sales numbers, were about front-running T—-p’s tariffs. Which means that like retail sales, production might have been pulled forward from the next few months, which may lead to whipsaw declines.”
Revisions to the data released this morning and going all the way back to last year showed a more complex picture. The net effect of the revisions was a decline of -0.1% for each measure through April. But the main point stands, as total production peaked in February, and manufacturing production peaked in March:
On a YoY basis, both total and manufacturing production are up 0.6%, a sharp deceleration from the previous four months:
Both of this morning’s reports were important. Industrial production has historically been one of the two main coincident indicators for recessions, while real retail sales are both an important short leading indicator, and to the extent they presage real personal consumption, which is another important coincident behavior. Both of them declined, probably due to the end of front-running tariffs by both consumers and producers. At the same time, both are within the range of noise, and for both to actually signal a downturn I would need confirmation from other short leading indicators, as I discussed yesterday.
