 | Industrial Production Up 0.2% in August |
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Implications: Still no sign of either a double-dip or deflation. Industrial production continued the alternating strong month / weak month pattern it has shown all year, with large increases in one month followed by smaller increases or flat output in the next. Production was up 0.6% in July, so the modest 0.2% gain in August came as no surprise. The "weak" news in the report was that including revisions to prior months, overall production was down 0.2% in August. However, the underlying trend remains upward: manufacturing ex-autos, the most stable part of the report, was up 0.5% in August and is up at a 6.9% annual rate in the past six months. It is also up in five of the past six months. The softness in August was largely due to autos, which are extremely volatile, and utilities, where production is often weather-dependent.
In other news this morning, the Empire State Index, a measure of manufacturing in New York, declined to 4.1 in September from 7.1 in August. However, the sub-indexes for new orders, shipments, and employment all improved.
On the inflation front, import prices increased 0.6% in August while export prices gained 0.8%. Both price measures are up 4.1% in the past year. Ex-petroleum, import prices are up 3.1% versus a year ago; ex-agriculture, export prices are up 3.9% versus a year ago. When trade prices, which are from extremely competitive markets, are growing faster than overall consumer prices, it's a signal that overall inflation is headed higher.
Click here for the entire report.
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