The headlines say seasonally adjusted Industrial Production (IP) improved. Econintersect‘s analysis agrees  – and the unadjusted rolling averages are accelerating from positive backward revisions. 

 IP headline index has three parts – manufacturing, mining and utilities – manufacturing was up 1.1% this month (up 4.8% year-over-year), mining down0.1% (up 9.3% year-over-year), and utilities were up 5.1% (up 1.8% year-over-year). Note that utilities are 9.8% of the industrial production index, whilst mining is 15.9%.

Comparing Seasonally Adjusted Year-over-Year Change of the Industrial Production Index (blue line) with Components Manufacturing (red line), Utilities (green line), and Mining (orange line)

Unadjusted Industrial Production year-over-year growth for the past 12 months has been between 2% and 4% – it is currently 5.2%. It is interesting that the unadjusted data is giving a smooth trend line.

Year-over-Year Change Total Industrial Production – Unadjusted (blue line) and the Unadjusted 3 month rolling average (red line)

Economic downturns have been signaled by only watching the manufacturing portion of Industrial Production. Historically manufacturing year-over-year growth has been negative when a recession is imminent. This index is not indicating a recession is imminent.

Seasonally Adjusted Manufacturing Index of Industrial Production – Year-over-Year Growth

Seasonally Adjusted Capacity Utilization – Year-over-Year Change – Seasonally Adjusted – Total Industry (blue line) and Manufacturing Only (red line)