Industrial Production and Manufacturing Capacity Utilization through April 2016

Both of these data points are reported in the Federal Reserve G17 data base. The index had an all-time high of 106.40 in January 2015 and has had a mixed performance ever since. In 2016 month over month growth has been positive for two months and negative for two month. In April M/M growth on a three month moving average basis (3MMA) was positive 0.7 percent but the 3MMA growth on a Y/Y basis was negative 1.5 percent. So what are we to believe?

This could and will be spun both ways. Our preference is to say that the short term result indicates positive growth but more importantly the data suggests that momentum is positive because the short term result (1 month) is better than the long term result (12 months). We place less emphasis on the actual numbers than we do direction and we conclude that the April data suggests an improvement in industrial production. Figure 1 shows negative Y/Y growth of the 3MMA but the negativity is decreasing. Data is seasonally adjusted and the index is based on the May 2012 level being defined as 100.