January 2010 Industrial Production
The Federal Reserve has released its data for January 2010 industrial production. The headline number showed a 0.9% increase in January compared to December.
The Federal Reserve has released its data for January 2010 industrial production. The headline number showed a 0.9% increase in January compared to December. But, I pay particular attention to consumer durable goods and durable goods excluding motor vehicle and parts industrial production because they give me a good idea on what is happening with metalworking facilities. In this post I’ll focus on the actual indexes and how they are changing. If you would like to see leading indicators for any of the industrial production indexes discussed, or how industrial production leads machine tool sales, then you can find a wealth of information at Metalworking Forecasting Tools (the repository for all of the data I collect and analyze). At that link I use rate of change curves to correlate different industrial production indexes with the appropriate spending data, which are the best leading indicators for industrial production.
When looking at most of these indices you will see a similar pattern. Industrial production levels peaked in 2007 or so, then fell 20-30%, rose 3-5% off the lowest level and are now stabilizing. There are a couple of exceptions to this general scenario. The medical industry has seen almost nothing but growth in its industrial production index. (Hint: This is a good industry to be involved in.) Also, the aerospace industry did not fall nearly as far as others, but it has only moved a couple of percent off the low just like the rest.
The charts to the right are in the order that I discuss them. Consumer durable goods industrial production was 82.2 for January 2010. This was 14.3% higher than January 2009, which was also the most recent low in consumer durable goods industrial production. In the first half of 2009, the index hovered around the mid 70s while in the second half of 2009 it hovered around the low 80s. While consumer durable goods industrial production has stabilized, we aren’t seeing any real growth. The index is still 27.6% below its peak. Notice that this measure of industrial production is highly seasonal because of plant closings in the auto industry in July.
I use durable goods excluding motor vehicles and parts industrial production as a proxy for capital equipment industrial production (or business durable goods). In January this industrial production measure was 103.6. This is 2.8% below the level of January 2009 and is only 2.6% higher than its most recent low in April 2009. It is down 19.6% from its peak in September 2007.
Mining, oil and gas field machinery industrial production was 158.8 in January 2010, or 20.2% below its January 2009 level. This is 4.9% higher than the most recent low in August 2009 but is 28.5% below the peak in October 2007.
In January 2010, aerospace industrial space was 123.0, which was 3.2% less than it was in January 2009. The current level is 2.5% above the most recent low in May 2009 and 7.7% below the most recent peak in December 2008. The severe drop in late 2008 was due to the Boeing strike, and it also may be the cause of the high level in December 2008, as facilities tried to catch up on work delayed by the strike.
Construction machinery industrial production was 91.7 in January 2010, which was 24.5% less than what it was in January 2009. January’s level is 23.9% higher than the most recent low of November 2009, but it is still 48.8% below the high in March 2008.
Farm equipment industrial production was 97.7 in January 2010, which is 0.5% higher than January 2009. This is 16.9% above the most recent low in December 2009, but 19.6% below the high in October 2007.
Medical equipment industrial production in January 2010 was 135.5. This is 5.6% above the level of January 2009. This is virtually the highest level for medical equipment industrial production ever.
In January 2010, power transmission equipment industrial production was 53.7, which was 18.1% lower than the level of January 2009. The current level is 7.0% above the most recent low in July 2009 but 48.4% below the high in August 2006.
Motor vehicles and parts industrial production was 68.2 in January 2010. This is 39.8% higher than what it was in January 2009, which was also the most recent low. However, this index is still 41.3% off of its all-time high in March 2004.
Computers and electronics industrial production was 174.8 in January 2010, which is 4.3% higher than January 2009. The index is 7.0% above the low in April 2009 but is 16.9% below the high in June 2008.