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Auto Industry: Industrial Production in October

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Industrial production in October

According to the Fed’s latest release on November 16, 2017, the seasonally adjusted US Industrial Production Index stood at 106.14 in October 2017. It reflected a handsome increase from 105.15 in September 2017 and 103.17 in October 2016. October was the second consecutive month that the index continued to rise on a month-over-month basis after falling in August.

Note that the industrial production is a leading indicator of the country’s economic conditions. A rise in industrial production is considered to be a positive sign for the country’s economic prospects.

Motor vehicle assemblies in October

In October, seasonally adjusted manufacturing data, as compiled in the US Industrial Production Index, stood at 104.80 from 103.50 in the previous month. The data also reflected a handsome year-over-year rise—compared to 102.20 in October 2016.

In contrast, seasonally adjusted motor vehicles assemblies in the US fell to 10.95 million vehicle units in October 2017—compared to 12.22 million a year ago. In the previous month, motor vehicle assemblies stood at 10.77 million units.

Possible impact on auto sales?

The manufacturing index is one of the key components of the US Industrial Production Index. A positive change in October’s industrial production data indicated stable production growth in the auto industry. Overall, the positive growth could be driven by flourishing economic growth and high consumer sentiments, as we discussed in the previous part of this series. Despite weakness in motor vehicle assemblies, higher overall industrial production data should boost auto investors’ confidence.

Currently, General Motors (GM) and Ford Motor Company (F) are the two largest automakers in the US in terms of sales (IYK) and production volume. Fiat Chrysler (FCAU) and Toyota (TM) also contribute to US motor vehicle assemblies.

Automakers will likely release the November US sales data in the first week of December. Visit Market Realist’s Autos page for updates.

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