Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Industrial Production Declined 0.1% in December
Posted Under: Autos • Data Watch • Government • Industrial Production - Cap Utilization • Spending • COVID-19
Supporting Image for Blog Post

 
Implications:  US industrial activity moderated slightly to end 2021, following gains in October and November as factories came back online after temporary disruptions from Hurricane Ida.  The slowdown in activity was broad-based in December, with most major categories posting declines.  Looking at the details, the utilities sector led the headline index lower, down 1.5%, due to the warmest December weather in the "lower 48" since at least 1921 (when records started).  Meanwhile manufacturing production – both including and excluding autos – dropped in December.  A portion of the slowdown can be attributed to rising COVID cases, which made staffing factory floors increasingly difficult.  As the Omicron wave passes, expect activity to trend higher once again.  Business inventories remain lean, order backlogs are elevated, and demand continues to outstrip supply.  As supply chains gradually ease, there is plenty of ground for production to make up just to get things back toward "normal."  The mining sector (think oil rigs in the gulf) was one bright spot in December, rising 2.0% on the month and up at a 30.6% annualized rate in the fourth quarter. We expect this sector to be a tailwind for overall industrial production in the months ahead as activity still remains 6.5% below pre-pandemic levels and has lagged the recovery elsewhere.  Looking at things more broadly, today's decline puts industrial production 0.6% above pre-pandemic levels. This means production still has a long way to go to meet current demand.  For context, this morning's report on retail sales showed that even after adjusting for inflation, "real" retail sales are up 10.1% over that same time period.  Ongoing issues with supply chains and labor shortages are hampering a more robust rise in activity, with job openings in the manufacturing sector currently more than double pre-pandemic levels.  This mismatch between supply and demand, shows why inflation has accelerated so sharply.  Normally easy money takes 18-24 months to show up as inflation. As supply chains heal inflation will moderate, but while supply chain issues are transitory, excess M2 growth is not. Look for industrial production to bounce back in the months ahead.   

Click here for a PDF version
Posted on Friday, January 14, 2022 @ 11:56 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Retail Sales Declined 1.9% in December
The Producer Price Index (PPI) Rose 0.2% in December
COVID-19 Tracker 1/12/2022
The Consumer Price Index (CPI) Increased 0.5% in December
Job Market Making Progress
Nonfarm Payrolls Increased 199,000 in December
The ISM Non-Manufacturing Index Declined to 62.0 in December
The Trade Deficit in Goods and Services Grew to $80.2 Billion in November
Government Spending is Way Up, But That’s Not What’s Causing Inflation - Part 2
The ISM Manufacturing Index Declined to 58.7 in December
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.