Industrial production

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Industrial Production

Released On 3/15/2013 9:11:00 AM For Feb, 2013 Prior Prior Revised Consensus Consensus Range Actual Production - M/M change -0.1 % 0.0 % 0.5 % 0.2 % to 1.0 % 0.7 % Capacity Utilization Rate - Level 79.1 % 79.2 % 79.4 % 79.0 % to 79.6 % 79.6 % Manufacturing - M/M -0.4 % -0.3 % 0.3 % 0.2 % to 0.7 % 0.8 %

Highlights Today's industrial production report was released early-at 9:11 a.m. ET. Manufacturing in in February improved sharply. Overall industrial production jumped 0.7 percent in February after no change in January (originally down 0.1 percent). Market expectations were for a 0.5 percent gain in February for overall production. The manufacturing component rebounded 0.8 percent, following a 0.3 percent drop in January. Analysts projected a 0.3 percent rise for the manufacturing component. The rate of motor assemblies remained strong and rose 3.6 percent after a 4.9 percent drop in January. Other industries generally showed healthy gains. Excluding motor vehicles, manufacturing gained 0.6 percent in February after a 0.1 percent increase the prior month. The output of utilities increased 1.6 percent in February while production at mines dipped 0.3 percent. Capacity utilization for total industry advanced to 79.6 percent from 79.2 percent in January. Expectations were for 79.4 percent. Manufacturing may be making a comeback after a soft January. Today's numbers will likely nudge up estimates for first quarter GDP. The report also will boost debate next week within the Fed on when to unwind easy monetary policy. The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.

Market Consensus before announcement Industrial production in January fell back but after strong gains in December and November. Industrial production in January slipped 0.1 percent, following an advance of 0.4 percent the month before and a 1.4 percent jump in November. In January, the manufacturing component declined 0.4 percent, following a boost of 1.1 percent in December and an increase of 1.7 percent in November. The output of utilities gained 3.5 percent in January while production at mines fell 1.0 percent. Capacity utilization for total industry eased to 79.1 percent from 79.3 percent in December. Looking ahead, national manufacturing growth is likely to be on the plus side as production worker hours rebounded 0.5 percent in February. This should boost the manufacturing component in industrial production.

Definition The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.  Why Investors Care

The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy. Data Source: Haver Analytics

The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent. Data Source: Haver Analytics