Industrial Production Still Growing Faster

The consumer durable goods industrial production index was 84.8 in July 2012. This is the lowest level for the index since December 2011, but July is a seasonally low month for manufacturing output. Compared to July 2011, industrial production grew 8.7%. This is a strong rate of growth but is the lowest month-over-month growth rate since December 2011. Despite the slower rate of growth in July, the annual rate of change continued its rapid acceleration. The annual rate of growth is now 8.7%, which is the fastest rate of annual growth since March 2011. Also, this marks the ninth consecutive month of growth for consumer durable goods industrial production. Since consumer durable goods industrial production is the best leading indicator for machine tool sales, this is a very positive sign for future machine tool consumption.

A good leading indicator for consumer durable goods industrial production is consumer durable goods spending. Spending levels remain near all-time highs. The month-over-month rate of change in spending in June was 8.2%, which is the fastest since February 2011. Also, the annual rate of growth in spending has accelerated each of the last two months. This indicates that consumer durable goods industrial production should continue to grow faster.