Industrial Production, the green shoot of the American economic recovery – continues to soften. Year-over-year (YoY) growth continues to decline, and the decline worsened in May 2011.
The Fed’s press release says this was the second flat month based on seasonally adjusted data.
Industrial production edged up 0.1 percent in May, the second consecutive month with little or no gain. Revisions to total industrial production in months before May were small. In May, manufacturing production rose 0.4 percent after having fallen 0.5 percent in April. The output of motor vehicles and parts has been held down in the past two months because of supply chain disruptions following the earthquake in Japan. Excluding motor vehicles and parts, manufacturing output advanced 0.6 percent in May and edged down 0.1 percent in April; the decrease in April in part reflected production lost because of tornadoes in the South at the end of the month. Outside of manufacturing, the output of mines increased 0.5 percent in May, while the output of utilities fell 2.8 percent. At 93.0 percent of its 2007 average, total industrial production in May was 3.4 percent above its year-earlier level. Capacity utilization for total industry was flat at 76.7 percent, a rate 3.7 percentage points below its average from 1972 to 2010.
As Econintersect uses unadjusted data, it graphs the data YoY in monthly groups. To the eye, there is general agreement with the adjusted data of the Federal Reserve that Industrial Production did not grow in May 2011.
Besides the supply disruption of the Japanese earthquake, the major drag was utilities.
When you look at the data in detail, it is not as bad as it seems at first blush. Much of the increased softness can be explained away. That is not to say Industrial Production is in good shape – and it is a direct reflection of the current economy.
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