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February industrial production was unchanged from January, but this masks the fact that January production was revised up by 0.4% and February's weakness was concentrated in utilities and mining. Manufacturing production is where the strength lies, and this is shown in the charts above. Over the past six months, manufacturing production is up at a strong, 7.4% annualized rate. US factories are simply churning out a lot of stuff, and there is no sign at all of weakness on this score.
3 comments:
Scott,
I really appreciate your blog, both the great graphs and the clear explanations that this non-economist can even understand [at least I think I do :)].
I assume the industrial production data is a measure of dollars, not actual stuff. It seems possible that certain costs that are predominant in industrial production [e.g. raw goods and transportation] could at times rise faster [or slower] than the general CPI, with such cost increases [or decreases] being passed on to the purchasers--or at whatever point the values get measured.
If that’s the case, it seems that the dollar value of industrial production could be rising due more to increased costs than due to more stuff being produced.
Conversely, some goods might get cheaper [e.g. computers and other high tech stuff] and thus no change in industrial production dollar values could mask an underlying increase in the amount of stuff being produced.
Are these factors of any significance? If yes, are there any methods used to take them into account to adjust the raw “industrial production” dollar numbers into a “real amount of stuff being produced” number?
Thanks.
John
Industrial production is a measure of actual output, not the dollar value of output. So the strength or weakness of the dollar does not play a role.
Thank you Scott for the clarification.
John
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