Monday, October 17, 2011

Sept. Industrial Output Gains Are Above-Average

The Federal Reserve released data today on U.S. industrial production for the month of September with the following highlights: 

1.  Industrial production increased in September by 0.2% on a monthly basis and 3.2% on an annual basis. 

2. For the third quarter (July-September) industrial production increased an annual rate of 5.1%.

3. Manufacturing output increased 0.4% in September to a level that was 3.9% higher than a year ago.

4. The output of manufactured durable goods increased 0.6% in September to 7.9% above its year-earlier level.  

5. Mining output increased by 0.8% in September to 5.2% above its year-ago level.  

6. The September industrial production index at 94.2 is 12.8% above the cyclical low in June 2009 of 83.5, and is 6.4% below the cyclical high of 100.7 in December 2007 (see chart above). 

MP: On an annual basis, the 3.2% growth in industrial production through September is above the 2.2% average growth rate since 1973, and the 3.9% growth in manufacturing output is above its 2.6% average rate.  The above-average growth in industrial output through the third quarter this year runs counter to the claims that we are entering another recession. 

Update: Brian Wesbury and Bob Stein are predicting real GDP growth of 3.5% in the third quarter, and the 5.1% annualized growth in industrial output during the third quarter would certainly support that prediction. 

8 Comments:

At 10/17/2011 9:23 AM, Blogger VangelV said...

MP: On an annual basis, the 3.2% growth in industrial production through September is above the 2.2% average growth rate since 1973, and the 3.9% growth in manufacturing output is above its 2.6% average rate. The above-average growth in industrial output through the third quarter this year runs counter to the claims that we are entering another recession.

There are a few problems with the figures. First, if you understate inflation as the BLS does it is easy to overstate the growth of industrial production. Second, it is easy to have growth when you are coming out of a serious contraction, particularly when trillions of liquidity have been wasted to 'stimulate' activity.

The bottom line is that until a liquidation is allowed to take place the markets will not clear and growth will be very slow at best. At worst you will get a hyperinflationary depression as all that liquidity is lent out and spent.

 
At 10/17/2011 9:24 AM, Blogger morganovich said...

government spending for the first 9 months of 2011 has run at 5% above last year.

without that, there has basically been no growth at all, even if we believe the deflator numbers they are using.

this is not a recovery, it's just debt fueled federal expenditure.

 
At 10/17/2011 9:47 AM, Blogger Buddy R Pacifico said...

From the Federal Reserve Industrial Production report:

"The output of utilities moved down 1.8 percent as temperatures in September moderated following an unseasonably hot August. The operating rate for utilities declined to 77.6 percent, a rate 9.0 percentage points below its long-run average."

If this was a report on the Chinese utility operating rate then warning bells on its economy would be sounding. The U.S. had a very hot summer but an operating rate 9.0% below long-run average is interesting. Is the U.S. surging in efficiency with Energy Star driven effects?

 
At 10/17/2011 10:13 AM, Blogger VangelV said...

If this was a report on the Chinese utility operating rate then warning bells on its economy would be sounding.

It is a great point. But having been reading postings on this site you already know just how easy it is for Mark to be optimistic regardless of what the data says.

 
At 10/17/2011 1:22 PM, Blogger Benjamin said...

So much unused capacity in the United States--this nation could easily sustain a very long boom, if only the Fed would listen to market monetarists, and target nominal GDP growth, as opposed to inflation or aggregates.

 
At 10/17/2011 3:12 PM, Blogger rjs said...

"Industrial production increased 0.2 percent in September after having been unchanged in August. Previously, industrial production was reported to have stepped up 0.2 percent in August."

http://www.federalreserve.gov/releases/G17/Current/default.htm

lets wait for next months revisions

 
At 10/18/2011 10:08 AM, Blogger morganovich said...

hey, but at least producer prices are SOARING:

In the 12 months to September, producer prices increased 6.9 percent, accelerating from Augusts 6.5 percent advance.

take these into account, and this industrial output gain is actually a decline in real terms.

 
At 10/18/2011 10:09 AM, Blogger VangelV said...

So much unused capacity in the United States--this nation could easily sustain a very long boom, if only the Fed would listen to market monetarists, and target nominal GDP growth, as opposed to inflation or aggregates.

That would be lovely. Destroy the USD and make the holders of hard assets very rich.

I hope that Ben is paying attention to people who give him the same advice that you are giving because my kids would like to trade in their gold and silver coins for Vermont.

 

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