Industrial production is following a similar path already outlined in payroll employment (May 8 post) and the ISM manufacturing and non-manufacturing surveys (May 5 post). After monthly declines averaging -0.8% in the fourth quarter and a doubling to -1.6% in the first quarter, April showed a decline of just -0.5% -- less than half the size of each of the last five months.
Moreover, manufacturing production showed stronger improvement with just an -0.3% April decline after an average monthly drop of -1.6% over the last half year.
Somewhat surprisingly, auto production is aiding the improvement with a third monthly gain after the stunning forth quarter decline and the gargantuan -26% plunge in January. Non-auto manufacturing output continues to decline but also at a slower pace than at year end.
The smaller declines are consistent with improvement in the ISM manufacturing index after bottoming in December. The April production index was far bettered by the forward looking new orders index which reached 47.2 -- still below the 50 mark which marks flat growth (read stability) but nearing it.
In past comments (i.e. Telling Economic Indicators) I've reviewed the importance of industrial production as a key indicator of the economy. The National Bureau of Economic Research uses industrial production and three other indicators (i.e. payrolls, income and sales) to gauge when the economy is in recession. Income and sales showed gains in March.
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