uploads///US Industrial Production in November

US Industrial Production Fell: What It Means for the Economy

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US industrial production

According to a report provided by the Federal Reserve, US industrial production fell 0.4% in November 2016, compared to its upwardly revised rise of 0.1% in October 2016. 

November’s fall was below the market’s expectation of a 0.2% fall. Industrial production is an important economic indicator, as it shows the outputs of the manufacturing, mining, and utilities sectors.

Industrial production fell in November mainly due to a large fall in utilities output and a marginal fall in manufacturing output. Utilities output fell nearly 4.4% in November, and manufacturing output fell nearly 0.1%. However, mining output showed an improvement, rising 1.1% in November 2016.

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Impact on the economy

Other US economic indicators showed improvements in performance. US economic growth (VFINX) (VOO) (IVV) also showed strong movement in 3Q16. According to a preliminary estimate from the U.S. Bureau of Economic Analysis, US GDP showed a huge improvement in 3Q16, surprising the market with a rise of 3.2% and beating expectations of 2.5%.

In 2Q16, US GDP rose 1.4%. The rise in 3Q16 GDP came primarily from positive contributions from exports, private inventory investments, personal consumption expenditure, and federal government spending.

As overall economic health (IWM) (QQQ) is improving, we can expect manufacturing, mining, and utilities outputs to improve, which should ultimately increase industrial production.

In the next part of this series, we’ll analyze US inflation in November 2016.

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