Will Increased US Industrial Production Drive Economic Growth?



US industrial production improved in September

According to a report from the Federal Reserve, US industrial production rose 0.1% in September 2016 compared to -0.5% in August 2016. The September reading was below market expectations of a 0.2% rise.

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Will increased US industrial production drive growth?

Industrial production figures reflect the performances of the manufacturing, mining, and utility sectors. September industrial production figures in the United States (IWM) (IVV) (VOO) show that output from manufacturing and mining improved during the month, while the output from utilities fell.

In September, manufacturing output rose 0.2%, production of durables output remained unchanged, production of non-durables output rose 0.5%, and mining output rose 0.7%. The index for utilities fell 1.0% in the same month.

Impact on the economy

The rise in industrial production is a positive sign that signifies that the major backbones of the economy like manufacturing, mining, and utilities are driving economic growth. Improving figures indicate that the economy may see further improvement in 4Q16.

Bill Miller, chair and CEO of LMM Capital Management, has a bullish outlook on the US economy (IWF) (IWM) (IVV). According to Miller, the US economy (VOO) (VFINX) is in good shape, and US economic growth is far better than the economic growth of other developed economies (EFA) (EWJ) (VGK). Miller said that the labor market is improving, and the unemployment rate is falling. In the last two months, the US jobs report showed a huge improvement.

In the next part of this series, we’ll analyze the performance of US crude oil inventories for the week ended October 14, 2016.


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