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Economy in Brief

Industrial data have given off very mixed signals. Part of it is that autos are weaker than the sector at large. But also regional manufacturing surveys have really disconnected from the National ISM and from actual Industrial production results. The look-ahead to March manufacturing surveys from the Philly Fed and NY Fed were both quite weak. Philly also was weak for February but New York’s  Empire State index jumped for that one month then fell back.So having a nice firm rise in industrial production for February in the main actual reading on industrial output is somewhat reassuring.The IP report shows a 3-month trend UP at a 3.9% pace; for the quarter to date (final column in red) a rise at a 1.7% rate. Consumer goods output is expanding at a 5.3% pace in Q1. Business equipment is contracting in the quarter to date at a pace of 0.9%. But for materials, the greater part of IP, the pace of output is rising at a pace of 2.7%.  For the first quarter industrial output is rising, but struggling; its down by 0.3% over 6-months for manufacturing alone.  For consumer durables autos weakness is severe at a drop of 3.5%; ex autos durables consumer output is up at a 1.3% pace.  Nondurable consumer goods output is strong, up by 7.4% at an annual rate; if it weren’t for the strength in consumer energy, the gain would be at a pace of 2.1%. On balance the figures are relatively firm compared especially to recent manufacturing surveys on the sector.

Capacity utilization continues to hold to strong levels but is at the same time well short of the past cycle peak. Capacity is not an issue in manufacturing. It has been on a plateau in recent months.  On balance industrial output is still showing gains. The first quarter of 2007 appears as though it will be a quarter of growth. Manufacturing surveys so far in the quarter seem to paint a weaker picture than the actual inflation-adjusted report on output itself. While that is a bit disconcerting, it is better that way, than the other way around.   
Industrial Production
  Monthly Pct. Changes At Annual Rates of Change SAAR
  Month-to-month Pct. Change 3-Month 6-Month Year/Year 07-Q1
Industrial Output Feb-07 Jan-07 Dec-06 %Change %Change %Change Pct Change
All Prod&Materials 0.9% -0.3% 0.8% 5.7% 1.1% 3.4% 2.7%
All Products 0.9% -0.4% 0.8% 5.4% 1.6% 3.6% 2.9%
Final Products 1.1% -0.4% 0.8% 6.0% 2.8% 4.6% 3.8%
Manufacturing only
MFG - NAICS 0.3% -0.5% 1.1% 3.9% -0.3% 2.9% 1.7%
MFG-Durables 0.7% -0.8% 1.2% 4.3% 0.0% 4.3% 1.7%
MFG-Nondurables -0.1% -0.2% 1.1% 3.4% -0.7% 1.1% 1.7%
Consumer Goods 1.5% 0.0% 0.4% 7.4% 3.3% 3.4% 5.3%
Durables 1.6% -2.6% 1.7% 2.7% -2.1% -1.0% -1.0%
Automotive Production 3.2% -5.1% 2.4% 1.6% -2.0% -2.3% -3.5%
Ex. Automotive Production 0.2% -0.3% 1.1% 3.7% -2.1% 0.1% 1.3%
Nondurables 1.5% 0.8% 0.0% 9.2% 5.2% 4.9% 7.4%
Non Energy 0.3% -0.3% 0.8% 3.3% 3.7% 3.5% 2.1%
Cons Energy 5.3% 4.4% -2.5% 28.6% 10.4% 9.5% 26.0%
Business Equip. 0.4% -2.1% 2.2% 1.9% 2.3% 8.5% -0.9%
Transportation -0.1% -1.7% 1.6% -0.8% 6.4% 9.2% 2.1%
Computer&Office Eqpt 5.1% 2.8% 1.8% 40.1% 34.4% 30.8% 39.6%
Ex. Tech.& Transport 0.0% -2.3% 2.4% 0.3% 0.3% 7.5% -2.6%
Materials 1.0% -0.2% 0.8% 6.5% 0.4% 3.2% 2.7%
Durables 0.9% 0.5% 0.8% 8.7% 0.8% 4.9% 5.6%
Nondurables - Excl Energy 0.4% -1.4% 1.4% 1.2% -3.2% -0.3% -2.9%
Energy 1.9% -0.2% 0.2% 7.6% 3.2% 3.9% 3.1%
  Actual Auto Production Levels
  Month-to-month Pct. Change 3-Month 6-Month Year/Year 04-Q1
Vehicle Production Feb-07 Jan-07 Dec-06 %Change %Change %Change Pct Change
Autos -4.0% 15.8% -11.4% -6.3% -36.4% -10.9% -9.8%
Trucks 11.8% 8.0% -11.0% 30.0% -12.8% 1.8% 13.0%
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