Tag Archive: manufacturing

There Isn’t Supposed To Be The Two Directions of IP

US Industrial Production dipped in May 2018. It was the first monthly drop since January. Year-over-year, IP was up just 3.5% from May 2017, down from 3.6% in each of prior three months. The reason for the soft spot was that American industry is being pulled in different directions by the two most important sectors: crude oil and autos.

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The Currency of PMI’s

Markit Economics released the flash results from several of its key surveys. Included is manufacturing in Japan (lower), as well as composites (manufacturing plus services) for the United States and Europe. Within the EU, Markit offers details for France and Germany.

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Globally Synchronized Asynchronous Growth

Industrial Production in the United States rose 3.5% year-over-year in April 2018, down slightly from a revised 3.7% rise in March. Since accelerating to 3.4% growth back in November 2017, US industry has failed to experience much beyond that clear hurricane-related boost. IP for prior months, particularly February and March 2018, were revised significantly lower.

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Why The Last One Still Matters (IP Revisions)

Beginning with its very first issue in May 1915, the Federal Reserve’s Bulletin was the place to find a growing body of statistics on US economic performance. Four years later, monthly data was being put together on the physical volumes of trade. From these, in 1922, the precursor to what we know today as Industrial Production was formed. The index and its components have changed considerably over its near century of operative history.

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The Best ‘Reflation’ Indicator May Be Japanese

Japanese industrial production dropped sharply in January 2018, Japan’s Ministry of Economy, Trade, and Industry reported last month. Seasonally-adjusted, the IP index fell 6.8% month-over-month from December 2017. Since the country has very little mining sector to speak of, and Japan’s IP doesn’t include utility output, this was entirely manufacturing in nature (99.79% of the IP index is derived from the manufacturing sector).

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US Industry Experiences The Full 2014 Again in February

In February 2018, it was like old times for the US industrial sectors. Prior to the 2015-16 downturn, the otherwise moribund economy did produce two genuine booms. The first in the auto sector, the other in energy. Without them, who knows what the no-recovery recovery would have looked like. They were for the longest time the only bright spots.

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Data Distortions One Way Or Another

Back in October, we noted the likely coming of two important distortions in global economic data. The first was here at home in the form of Mother Nature. The other was over in China where Communist officials were gathering as they always do in their five-year intervals. That meant, potentially. In the US our economic data for a few months at least will be on shaky ground due to the lingering economic impacts of severe hurricanes.

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US IP On The Other Side of Harvey and Irma

Industrial Production in the US was revised to a lower level for December 2017, and then was slightly lower still in the first estimates for January 2018. Year-over-year, IP was up 3.7%. However, more than two-thirds of the gain was registered in September, October, and November (and nearly all the rest in just the single month of April 2017).

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How Global And Synchronized Is A Boom Without China?

According to China’s official PMI’s, those looking for a boom to begin worldwide in 2018 after it failed to materialize in 2017 are still to be disappointed. If there is going to be globally synchronized growth, it will have to happen without China’s participation in it. Of course, things could change next month or the month after, but this idea has been around for a year and a half already.

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The Dismal Boom

There is a fundamental assumption behind any purchasing manager index, or PMI. These are often but not always normalized to the number 50. That’s done simply for comparison purposes and the ease of understanding in the general public. That level at least in the literature and in theory is supposed to easily and clearly define the difference between growth and contraction.

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Is Un-Humming A Word? It Might Need To Become One

Industrial Production in the US was up 3.6% year-over-year in December 2017. That’s the best for American industry since November 2014 when annual IP growth was 3.7%. That’s ultimately the problem, though, given all that has happened this year. In other words, despite a clear boost the past few months from storm effects, as well as huge contributions from the mining (crude oil) sector, American production at its best can only manage to reflect...

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Industrial production: The Chinese Appear To Be Rushed

While the Western world was off for Christmas and New Year’s, the Chinese appeared to have taken advantage of what was a pretty clear buildup of “dollars” in Hong Kong. Going back to early November, HKD had resumed its downward trend indicative of (strained) funding moving again in that direction (if it was more normal funding, HKD wouldn’t move let alone as much as it has). China’s currency, however, was curiously restrained during that...

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The Economy Likes Its IP Less Lumpy

Industrial Production rose 3.4% year-over-year in November 2017, the highest growth rate in exactly three years. The increase was boosted by the aftermath of Harvey and Irma, leaving more doubt than optimism for where US industry is in 2017. For one thing, of that 3.4% growth rate, more than two-thirds was attributable to just two months.

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Three Years Ago QE, Last Year It Was China, Now It’s Taxes

China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since “analysts” were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart here from 54.3 the month prior to 54.8 last month.

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Industrial Production Still Reflating

Industrial Production benefited from a hurricane rebound in October 2017, rising 2.9% above October 2016. That is the highest growth rate in nearly three years going back to January 2015. With IP lagging behind the rest of the manufacturing turnaround, this may be the best growth rate the sector will experience. Production overall was still contracting all the way to November 2016, providing the index favorable base comparisons that won’t last past...

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Bonds And Soft Chinese Data

Back in June, China’s federal bond yield curve inverted. Ahead of mid-year bank checks, short-term govvies sold off as longer bonds continued to be bought. It was for some a rotation, for others a reflection of money rates threatening to spiral out of control. On June 19, for example, the 6-month federal security yielded 3.87% compared to a yield of 3.525% for the 10-year.

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Broader Slowing in Industrial Production

Industrial Production rose 1.6% year-over-year in September 2017. That’s up from 1.2% growth in August, both months perhaps affected to some degree by hurricanes. The lack of growth and momentum, however, clearly predated the storms. The seasonally-adjusted index for IP peaked in April 2017, and has been lower ever since. This pattern, the disappointment this year is one we see replicated nearly everywhere on both sides (supply as well as demand)...

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Noisy PMI’s In China

In the US our economic data for a few months at least will be on shaky ground due to the lingering economic impacts of severe hurricanes. In China, the potential for irregularity is perhaps as great, though it has nothing to do with the weather. In a little over a week, Communist Party officials will gather for their 19th Party Congress.

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IP Weathers Storms But Not Cars

In late August 2006, ABC News asked more than a dozen prominent economists to evaluate the impacts of hurricane Katrina on the US economy. The cataclysmic storm made landfall on August 29, 2005, devastating the city of New Orleans and the surrounding Gulf coast. The cost in human terms was unthinkable, and many were concerned, as people always are, that in economic terms the country might end up in similar devastation.

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United States: Lack Of Industrial Momentum Is (For Now) Big Auto Problems

Industrial Production disappointed in the US last month, dragged down by auto production. Despite the return of an oil sector tailwind, IP was up just 2.2% year-over-year in July 2017 according to Federal Reserve statistics. It marks the fourth consecutive month stuck around 2% growth. The lack of further acceleration is unusual in the historical context, especially following an extended period of contraction.

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