Haver Analytics
Haver Analytics

Economy in Brief: March 2022

    • Component improvement is widespread.
    • Employment increases.
    • Pricing power eases.
    • Initial claims edged up in the latest week but remain near historically low levels.
    • Continued weeks claims are the lowest since December 1969.
  • In February total industrial production in Japan rose by 0.4%, reversing several months of declines. In January industrial production fell by 0.7%; in December it fell by 0.8%. That contrasts to the month previous to that as output had been up very strongly in November.

    Total industrial production has an uneven trend with a tilt toward the deceleration. At a 0.7% growth rate over 12 months that elevates to 1.7% over six months but then turns lower over three months as total industrial production declines at a 4.5% annual rate.

    Similarly, for manufacturing output, an increase posts in February with declines in January and December. Over three months there's a decline at a 6% annual rate that follows an increase at a 3% annual rate over six months and compared to a gain of only 0.3% over 12 months. Manufacturing shows a tendency to decline. The sharp negative growth rate over three months gives the series its demeanor but trend is not monotonic and therefore not clearly determined.

    Select industries The two industries in the table, textiles and transportation, show uneven and inconsistent monthly patterns as well as divergent sequential patterns. Textiles do show a progression toward acceleration while transportation shows an inclination toward weakness mostly based on the steep minus 20% annual rate decline over three months.

    Sector trends By product group or sector, the trends once again are uneven: consumer goods and intermediate goods follow the trend of overall industry showing declines in December and January and a slight rebound in February. Investment goods show a decline in December, an increase in January and a small decline in February; these results translate, once again, into mostly uneven sequential trends. For consumer goods, there's a 1.8% rate decline over 12 months, a sharp 10% rebound over six months, then a 6.5% annual rate decline over three months. For intermediate goods, there's a 1.0% increase over 12 months, another 1.0% increase at an annual rate over six months and then a 4% annual rate decline over three months. Investment goods show a clear trend that is weakening as growth is at 1.2% over 12 months, declining to a -2.3% pace over six months then eroding further to a -4.9% rate over three months.

    Mining shows sequential growth rates that are clearly deteriorating and logs a -9.6% annual rate decline over three months. Electric & gas utilities show the opposite trend, with a 16.3% surge in output over three months.

    Quarter-to-date The quarter-to-date trends show for overall industrial production a rise at a 4.6% annual rate and in manufacturing a rise at a 4.2% annual rate. By sector, consumer goods are up at a 4.6% annual rate, intermediate goods at a 4.4% annual rate and investment goods by 3.0% at an annual rate. Mining, however, shows declines in double digits at a -12.7% pace. Electric & gas utilities show an increase at a 22.7% annual rate.

    Since Covid... The changes since January 2020, a reference point over two years ago, underline how weak conditions in industry have been in the intervening period. Total industry output is down 2% on balance over that timeline. Manufacturing output is down by 3.1%. Consumer goods output is down by 7%, intermediate goods output is down by 1.3% and investment goods output is down by 0.6%. Since January 2020, mining output is down by 7.5%; however, electric & gas utilities have output up by 7.8%.

    • Gain is larger than expected.
    • Leisure & hospitality continues to lead growth.
    • Factory & construction sectors also improve.
    • Refinancings stand at lowest level since 2019.
    • Applications for purchase rise slightly.
    • Mortgage interest rates move steadily higher.
  • Italian industrial production in manufacturing fell by 3.4% in January following a 1.1% decline in December and a 1.5% gain in November. This series for manufacturing industrial production declines at 11.6% annual rate over three months, at an 8.3% annual rate over six months, and at a 2.4% annual rate over 12 months. Italian industrial production is sequentially decelerating: the more recent, shorter-period growth rates are weaker than the longer growth rates indicating progressive deterioration in Italy's manufacturing sector momentum. The current observation is for January 2022; with one month into the new quarter, industrial production is falling at a 20% annual rate early in 2022 Q1.

    Sector trends Declines in January permeate the index; there's a 3.6% decline in consumer goods output, a 1.6% decline in capital goods output, and a 3.4% decline in the output of intermediate goods. In December, the weakness is widespread again this time with consumer goods output flat and with a 2.2% decline in capital goods and a 0.6% decline in intermediate goods. In November, conditions are slightly more mixed, but more upbeat, with consumer goods output down by just 0.2%, capital goods output up by 2%, and intermediate goods output up by 0.7%.

    However, looking at the table, there are still sequentially deteriorating rates of growth for consumer goods and for intermediate goods in which the shorter, newer growth rates continue to show weaker and weaker results. The exception is for capital goods but it's not much of an exception because for capital goods there is a 12-month decline of 2.8%, over six months a decline at a 7.7% annual rate over emerges, and over three months that is only slightly improved to -7.1% - but that's still a severe downturn. It's still a rate of decline that's much greater than the 12-month rate.

    Quarter to date Consumer goods are declining at a 20.2% annual rate in the quarter to date. Capital goods output is declining at a 13.5% annual rate in the quarter to date while intermediate goods are declining at 19.7% annual rate. Obviously, the quarter-to-date data show severe and consistent weakness across sectors; there really isn't any exception and there isn't a strong sector.

    Transportation There are separate figures for the transportation industry, and there is some strength there. Transportation shows gains month-to-month in January, December and November. Transportation output is accelerating with the -1.3% change over 12 months, a 1% annual rate gain over six months and a huge 26.5% annual rate gain over three months. However, even with this sector embedded in the totals, manufacturing continues to decline into show sequential weakness.

    Other industrial measures The manufacturing PMI declined by 5.9% in January; it declined by 1.3% in December but did make a 2.8% increase in November. However, there is sequential deterioration as the manufacturing PMI goes from a gain of 5.7% over 12 months to a declining pace of 6.5% over six months and the declining pace accelerates to 17.1% annualized over three months. The PMI reinforces news from the headline showing weak output and progressively weakening output. The EU Commission statistics on industrial confidence for Italy are contrary to this; they show a 12-month level of confidence at 6, over six months they show average confidence higher at 9.2, and the three-month average is at 9.9. All of these are averages so according to the EU data industrial confidence in Italy has been progressively improving. However, industrial output percentage changes in totals as well as by sector, show the opposite: progressive deterioration. Also, the Italian manufacturing PMI from Markit shows progressive deterioration. The EU confidence measure must be picking up abstract optimism not on-the-ground reality.

    And there is inflation... On the same timeline, there's, of course, rampant inflation and it is rising because of supply problems because of high oil prices and for Italy we see a 13% annual rate over 12 months, we see another 13% annual rate over six months and that climbs to a 14.6% annual rate over three months. Italian inflation shows a slight tendency to accelerate; it clearly is stuck at a very high level. In the quarter to date, it's up to a 17.5% annualized pace. Inflation continues to be a problem in the industrial sector for Italy as it is in much of the rest of the world.

    • Inventories made even larger contribution than in first two estimates.
    • Domestic demand growth revised down. Corporate profit growth slowed.
    • Price inflation unrevised at 40-year high.
    • Monthly increases are mixed regionally.
    • Mountain states lead price gains y/y.