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  Industrial production fell 0.1% in January
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Implications:  Today's headline decline of 0.1% for industrial production is not something to worry about. The fall was largely due to a decline in mining (which is normally volatile) and utilities (January was not as unusually cold as December).  Including revisions to prior months, industrial production was up 0.2%.  Manufacturing is still a bright spot, expanding for the 7th consecutive month at a healthy 0.3% pace in January (+0.8% including upward revisions to prior months).  Auto manufacturing surged and should continue to add to production growth in the coming year as autos sales rise.  Industrial production is going to continue to move higher and will likely keep being led by business equipment.  Corporate profits are approaching a new record high and cash on the balance sheets of non-financial companies – earning nearly zero percent interest – had already reached a record high.  Now, finally, Bloomberg is reporting that S&P 500 companies are starting to reduce their cash hordes and increase capital spending more rapidly.  It makes sense that these larger companies take the lead given that they have access to the capital markets (through bond sales) and are better able to get a bank loan when they need one.  Commercial and industrial lending is now up three straight months, a far cry from the 20% year-over-year declines of early 2010.

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Posted on Wednesday, February 16, 2011 @ 10:22 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.
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