US Macro Updates

Key takeaway: Industrial production declined a substantial 0.6% in October. The previous estimate for September was also revised lower from 0.3% to 0.1%. However, even though the print was low, much of the drop was attributable to the recent strikes at the major motor vehicle manufacturers. In any case, overall, the manufacturing sector continues to remain soft. After a strong July print, both August and September had recorded soft manufacturing numbers and that trend continued in October as well. Consumer Goods production index decreased 1.2% and Business equipment production index declined 0.9%. Capacity utilization declined to 78.9 percent in October in line with its long-run (1972–2022) average.  

• Industrial Production decreased 0.6% m-o-m in Oct 2023 (Expectations -0.3%)
• Industrial Production Index Level
• Capacity utilization rate decreased to 78.9% in Oct (Sep 79.5%)

17th Oct 2023

Key takeaway: Industrial production increased 0.3% in September and advanced at an annual rate of 2.5% in the 3rd quarter of 2023. Overall, the manufacturing sector continues to remain soft. After a strong July print, both August and September have recorded soft manufacturing numbers. Consumer Goods production index increased 0.3% and Business equipment production index declined 0.7%. Capacity utilization moved up to 79.7 percent in September in line with its long-run (1972–2022) average. The overall picture remains one of resilience in the service sector and continuing activity in the construction sector which is countering a relative slowdown in manufacturing.  

• Industrial Production increased 0.3% m-o-m in Sep 2023 (Expectations +0.1%)
• Industrial Production Index Level
• Capacity utilization rate increased to 79.7% in Sep (Aug 79.5%)

15th Sep 2023

Key takeaway: The general picture in the US economy has been that of a slowdown in manufacturing but resilience in Services. However, last month’s release had shown Industrial Production increased a substantial 1.0% in July – which was welcome news for the manufacturing sector. However, after an exceptional July, Industrial Production once again printed a modest 0.4% in August. Similarly, the July print was revised down from 1.0% to 0.7%. Consumer Goods production index declined -0.2% and Business equipment production index increased 0.8%. Capacity utilization moved up to 79.7 percent in August in line with its long-run (1972–2022) average. The overall picture yet remains one of resilience in the service sector and continuing activity in the construction sector which is countering a relative slowdown in manufacturing.  

• Industrial Production increased 0.4% m-o-m in Aug 2023 (Expectations +0.1%)
• Industrial Production Index Level
• Capacity utilization rate increased to 79.7% in Aug (Jul 79.5%)

16th Aug 2023

Key takeaway: The general picture in the US economy has been that of a slowdown in manufacturing but resilience in Services. However, Industrial Production increased a substantial 1.0% in July – which was welcome news for the manufacturing sector. There was significant spike in Consumer Goods production (1.4%), led by automotive products. Business equipment production index also grew at a robust rate of 1.0%. However, while this is welcome news, it is also key to note that the Industrial Production reading for the previous month of June was revised down from 0.5% to 0.8%. Capacity utilization moved up to 79.3 percent in July, a rate that is 0.4 percentage point below its long-run (1972–2022) average. The overall picture yet remains one of resilience in the service sector and continuing activity in the construction sector which is countering a relative slowdown in manufacturing.  

• Industrial Production increased 1.0% m-o-m in Jul 2023 (Expectations +0.3%)
• Industrial Production Index Level
• Capacity utilization rate increased to 79.3% in Jul (Jun 78.6%)

19th Jul 2023

Key takeaway: Industrial Production declined for a second consecutive month in June by a sizeable 0.5%. Even the previous month of May was revised further down. While production in the Utilities segment has generally been falling in the recent months, industrial production numbers for Manufacturing and Mining also declined in June. While these numbers might not mean much standalone, when viewed together with historical averages, other PMI data and the Regional Fed manufacturing indexes, they do communicate a broader slowdown in manufacturing story. However, the key point to note has been the resilience of the service sector and the continuing activity in the construction sector which is countering a relative slowdown in manufacturing.  

• Industrial Production decreased 0.5% m-o-m in Jun 2023 (Expectations +0.0%)
• Industrial Production Index Level
• Capacity utilization rate fell to 78.9% in Jun (May 79.4%)

15th Jun 2023

Key takeaway: Industrial Production edged down 0.2% in May. The last 4 months readings have now been 0.0%, 0.1%, 0.5% and minus 0.2%. Similarly the manufacturing index also rose a tepid 0.1% in May. While these numbers might not mean much standalone, when viewed together with historical averages, other PMI data and the Regional Fed manufacturing indexes, they do communicate a broader slowdown in manufacturing story. However, the key point to note has been the resilience of the service sector and the continuing activity in the construction sector which is countering a relative slowdown in manufacturing.  

• Industrial Production decreased 0.2% m-o-m in May 2023 (Expectations +0.1%)
• Industrial Production Index Level
• Capacity utilization rate fell marginally to 79.6% in May (Apr 79.8%)

16th May 2023

Key takeaway: Industrial Production rose 0.5% in April after 2 months of relatively low prints in Feb and Mar. Preliminary releases had shown Industrial Production to have climbed 0.4% in March. However, subsequent releases revised this number back down to 0%. Hence, the 0.5% rise in the headline Industrial Production Index should still be viewed as indicative of a slowing manufacturing sector in the US. The Manufacturing Index for March was also revised lower from -0.5% to -0.8%. In contrast, preliminary estimates for April showed manufacturing grew 1.0% m-o-m.  The softness in manufacturing and mining indexes as well as declining capacity utilisation provides continuing evidence of a broad slowdown in US manufacturing. Regional Fed manufacturing indexes have also been pointing to a weaker manufacturing sector, including the latest NY Fed manufacturing survey which showed a massive index fall from from 10.8 to minus 31.8 (the lowest since 2009 excluding peak covid).  

• Industrial Production increased 0.5% m-o-m in Apr 2023 (Expectations -0.1%)
• Industrial Production Index Level
• Capacity utilization rate increased to 79.7% in Apr (Mar 79.4%)

14th Apr 2023

Key takeaway: After a large contraction in December and a jump back in January, Industrial Production in the US has been relatively muted in both Feb and Mar. Industrial production rose 0.4% in March against consensus expectation of +0.2%. A large part of the index increase though was attributable to a jump in the index for utilities as the return to more seasonal cold weather in Mar increased the demand for heating. On the other hand manufacturing and mining recorded decreases of 0.5% m-o-m in Mar – a further indication of a slowdown in US manufacturing. Yet, it is key to remember that the Index levels are far from those seen in previous recessionary episodes. Similarly, though capacity utilization (79.8% in Mar) has fallen from 2022 highs, it is still significantly above lows seen in previous recession. 

• Industrial Production increased 0.4% m-o-m in Mar 2023 (Expectations +0.2%)
• Industrial Production Index Level
• Capacity utilization rate increased to 79.8% in Mar (Feb 79.6%)