As forecast by Econintersect in its April economic forecast, economic growth has peaked in this economic cycle – at least in the manufacturing sector according the the Industrial Production (IP) data for April 2011.
Industrial production was unchanged in April after having increased 0.7 percent in March. Output in February is now estimated to have declined 0.3 percent; previously it was reported to have edged up 0.1 percent. In April, manufacturing production fell 0.4 percent after rising for nine consecutive months. Total motor vehicle assemblies dropped from an annual rate of 9.0 million units in March to 7.9 million units in April, mainly because of parts shortages that resulted from the earthquake in Japan. Excluding motor vehicles and parts, factory production rose 0.2 percent in April. The output of mines advanced 0.8 percent, while the output of utilities increased 1.7 percent. At 93.1 percent of its 2007 average, total industrial production was 5.0 percent above its year-earlier level. The rate of capacity utilization for total industry edged down 0.1 percentage point to 76.9 percent, a rate 3.5 percentage points below its average from 1972 to 2010.
The world is not coming to an end here. The economy moves in spurts, and the manufacturing sector is effected by global demand which was not helped by the Japanese disaster.
It is hard to tell from the above graphic that there is growth month-over-month (MoM) but the following graphic showing year-over-year (YoY) growth shows a “less good” trendline.
The current short term trend is slightly down – but Econintersect calls flat as the variations over the last five months are small. It is interesting to look at the strengths and weakness by market groups.
There was a general weakness in consumer products. Could this have been caused by price increases (aka inflation)? Remember, Industrial Production occurs one to two months before retail sales – and this means there is an anticipation of lower demand.
Uncertainty causes industry to hold at current levels.
Empire State Manufacturing Survey Less Good in May 2011 by Steven Hansen
Consumers Come to Terms with Frugality by Rick Davis
Business Sales Up Strongly in March 2011 by Steven Hansen
March Retail Sales: A Slight Decline in Real Terms by Doug Short