Industrial production unexpectedly dips in May. It peaked eight months ago.
Industrial Production and Capacity Utilization
Today the Fed released its Industrial Production and Capacity Utilization report for May 2023.
- Industrial production edged down 0.2 percent in May following two consecutive months of increases. The Bloomberg Econoday consensus was a small increase.
- In May, the index for manufacturing ticked up 0.1 percent, while the indexes for mining and utilities fell 0.4 and 1.8 percent, respectively.
- The index for motor vehicles and parts moved up 0.2 percent in May after jumping nearly 10 percent in April.
- At 103.0 percent of its 2017 average, total industrial production in May was 0.2 percent above its year-earlier level.
- Capacity utilization moved down to 79.6 percent in May, a rate that is 0.1 percentage point below its long-run (1972–2022) average.
Peak Months For 5 Indexes
- Industrial Production: September 2022, 103.5
- Manufacturing: October 2022, 101.2
- Motor Vehicles and Parts, new high this month, 112.1
- Consumer Durable Goods: April 2022, 109.4
- Manufacturing Durable Goods: January and April 2023: 129.8
Despite the strength in autos, no debt led by Biden’s EV push and subsidies, manufacturing production is still below where it was seven month’s ago.
A long term chart better shows the trends.
Industrial Production Index Since 1972
Recession Lead Time After Industrial Production Peak
Peaks in industrial production tend to mark recessions.
Industrial production and manufacturing industrial production peaked eight and seven months ago respectively.
Politically speaking, if you are going to have a recession on your watch, it’s much better to have it early in your term than heading into an election campaign. But here we are.
Inflation is still not under control, and this economy is certainly not firing on all cylinders.
More Challenges for the Economy Ahead – MishTalk Video With Adam Taggart
To get inflation under control, the Fed Pencils in Two More Interest Rate Hikes in 2023
And please see my Video with Adam Taggart where we discuss many of my recent posts on the economy.
Adam is one of the best interviewers around. It was a pleasure to be on his show.
