Global| Apr 17 2007U.S. IP is Up But Still is a Mixed Up Sector
Summary
The chart on the left shows the trends for output by main manufacturing sector. As consumer output has steadied and strengthened, the business sector has been unraveling. This is an unpleasant picture and has been quite unexpected. We [...]
| · Industrial production fell by 0.2% in March as utilities output pulled back but manufacturing output advanced by a strong 0.7% led by a gain of 0.9% in durable goods output. March saw a decline in consumer goods output, materials production was flat and there was a rise of 0.8% in business equipment output. · But for the quarter as a whole and on trend, industrial production is a story of firming consumer output offset by plunging demand for equipment on the part of business with materials output vacillating about unchanged. Manufacturing output rose by 1.5% in Q1 given the strong productivity there that was not enough to create job growth in the sector. · Looking at the just completed quarter we find industrial production is higher for most measures. So the National ISM report is correct to be above 50. There is a great deal of regional disparity according to various regional manufacturing surveys. We see that in the variety of conditions across industry groups there is a great deal of variation as well. Consumer durables output in the quarter rose at a 0.1% pace as auto output fell. Consumer nondurable output rose by a robust 6% pace with energy output up at a 12% pace. Business equipment output fell in the quarter but computer and office equipment production rose by 34.3%. Materials output was mixed, up by 0.5% in the quarter but up by 1.9% for durable goods and off by 1.7% for nonenergy nondurable goods. Overall auto production fell by 0.1% in Q1 but truck production expanded at a 52% annual rate. |
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| Monthly Percent Changes | At Annual Rates of Change | SAAR | |||||
| Month-to-month Percent Change | 3-Month | 6-Month | Year/Year | 07-Q1 | |||
| Industrial Output | Mar-07 | Feb-07 | Jan-07 | %Change | %Change | %Change | Pct Change |
| All Prod & Materials | -0.2% | 0.8% | -0.4% | 1.1% | 0.5% | 2.3% | 1.6% |
| All Products | -0.3% | 1.0% | -0.4% | 1.1% | 1.2% | 2.5% | 2.0% |
| Final Products | -0.3% | 1.2% | -0.5% | 1.4% | 2.3% | 3.4% | 3.1% |
| Manufacturing only | -- | -- | -- | -- | -- | -- | -- |
| MFG - NAICS | 0.7% | 0.1% | -0.6% | 0.7% | 0.5% | 2.7% | 1.5% |
| MFG - Durables | 0.8% | 0.2% | -1.1% | -0.3% | 0.7% | 3.5% | 0.4% |
| MFG - Nondurables | 0.5% | 0.0% | 0.0% | 1.9% | 0.2% | 1.9% | 3.0% |
| Consumer Goods | -0.6% | 1.7% | 0.0% | 4.1% | 2.4% | 2.1% | 4.5% |
| Durables | 0.6% | 1.7% | -2.9% | -2.6% | 0.2% | -1.2% | 0.1% |
| Automotive Production | 0.4% | 3.7% | -5.4% | -6.0% | 1.4% | -3.1% | -0.4% |
| Excl Automotive Production | 0.7% | 0.0% | -0.6% | 0.5% | -0.9% | 0.6% | 0.6% |
| Nondurables | -1.0% | 1.6% | 1.0% | 6.3% | 3.1% | 3.2% | 6.0% |
| Nonenergy | 0.6% | 0.5% | -0.1% | 4.0% | 4.8% | 3.9% | 4.3% |
| Consumption Energy | -6.1% | 5.4% | 4.5% | 13.5% | -2.2% | 0.7% | 12.1% |
| Business Equip. | 0.8% | 0.3% | -2.2% | -4.5% | 3.3% | 7.4% | -0.6% |
| Transportation | 0.2% | -0.1% | -1.4% | -5.2% | 6.0% | 7.6% | 0.3% |
| Computer & Office Equipment | 3.5% | 3.3% | 2.4% | 38.2% | 30.6% | 28.3% | 34.4% |
| Excl Technology & Transportation | 0.8% | -0.2% | -2.2% | -6.4% | 2.3% | 6.7% | -2.0% |
| Materials | 0.0% | 0.5% | -0.4% | 0.7% | -0.5% | 2.1% | 0.5% |
| Durables | 1.0% | -0.2% | 0.1% | 3.5% | -0.2% | 3.6% | 1.9% |
| Nondurables excl energy | 0.6% | 0.1% | -1.2% | -2.3% | -1.7% | 0.3% | -1.7% |
| Energy | -2.2% | 2.3% | -0.1% | -0.4% | 0.2% | 1.6% | 0.7% |
The chart on the left shows the trends for output by main manufacturing sector. As consumer output has steadied and strengthened, the business sector has been unraveling. This is an unpleasant picture and has been quite unexpected. We still do not know what is holding business back.
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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