Capacity Utilization and Industrial Production
NY Empire State @ 20.1 vs prior 26.3 and Industrial Production @ 0.6% vs prior 0.8% on the surface, showing declerating growth. Inside the numbers, Factory output excluding the 2.8% decline in automotive was up 0.4%.
Manufacturing output rose 7.9% in the fourth quarter on a rebound from the hurricanes. The fourth-quarter gain was the strongest in six years. Production of business equipment rose 0.5% in December to a level 10.1% above a year earlier.
Output of selected high-technology industries rose 2.7% in December to a level 26.1% above a year earlier. Semiconductor output increased 3.5% and is up 30.8% in the past year.
Excluding the high tech goods, factory output was flat in December. Hint, hint, if you were paying attention Friday the 13th, U.S. business inventories increased 0.5% in November as sales grew a tepid 0.1%.
Shhh, don' tell anyone, but we think the momentum is from rebuilding efforts in the Gulf (of Mexico that is). Production exploded, but consumption faded and the next quarter will tell whether we have great momentum or some gluttonous inventories.
On that note, Capacity Utilization @ 80.7% vs prior 80.3% hitting a 5 year high showing less available economic slack which could lead to production bottlenecks, sparking fears that the Fed may continue to raise interest rates.
If the momentum is real and bottlenecks occur, watch rates go up, up, and up. If we wind up with a glut and little demand, watch rates stop, then drop.
We like the rising rate scenario as it implies sustained economic activity, and we don't believe in a soft landing for the falling rate, helicopter drop scenario.
Manufacturing output rose 7.9% in the fourth quarter on a rebound from the hurricanes. The fourth-quarter gain was the strongest in six years. Production of business equipment rose 0.5% in December to a level 10.1% above a year earlier.
Output of selected high-technology industries rose 2.7% in December to a level 26.1% above a year earlier. Semiconductor output increased 3.5% and is up 30.8% in the past year.
Excluding the high tech goods, factory output was flat in December. Hint, hint, if you were paying attention Friday the 13th, U.S. business inventories increased 0.5% in November as sales grew a tepid 0.1%.
Shhh, don' tell anyone, but we think the momentum is from rebuilding efforts in the Gulf (of Mexico that is). Production exploded, but consumption faded and the next quarter will tell whether we have great momentum or some gluttonous inventories.
On that note, Capacity Utilization @ 80.7% vs prior 80.3% hitting a 5 year high showing less available economic slack which could lead to production bottlenecks, sparking fears that the Fed may continue to raise interest rates.
If the momentum is real and bottlenecks occur, watch rates go up, up, and up. If we wind up with a glut and little demand, watch rates stop, then drop.
We like the rising rate scenario as it implies sustained economic activity, and we don't believe in a soft landing for the falling rate, helicopter drop scenario.
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