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Wednesday, April 15, 2015

Industrial Production

Not a good report The weakness is not so much in March's headline, which is -.6. It's in the quarter, with a downward revision to January:
For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009. The decline last quarter resulted from a drop in oil and gas well drilling and servicing of more than 60 percent at an annual rate and from a decrease in manufacturing production of 1.2 percent. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline.
 Oil and freight doesn't come up recessionary, but the concern here is that this feels more like 2006. The YoY is still +2%.The high for industrial production was in November, and when these figures are updated on the graph the decline will look worse.

Empire State rolled negative, still with great expectations. The last Dallas survey lapsed into the negatives, but that was expected due to the oil slowdown. In March, the Dallas general business activity index clocked in at -17.4. Richmond (March 24th) was negative as well, and decidedly so, if more modestly so than Dallas. Kansas has been quietly but steadily walking down, and turned negative in March as well.

We're getting to the point at which this should start showing up more in jobs.

While not brilliant, housing has been looking decent. Housing starts comes up tomorrow. 

Until the diffusion shows up in freight, it's not a recession. So I guess we wait for April trucking and May rail - two more months.

China's economy looks awful to me. I doubt we are going to be providing them any help, and I don't think they are going to be providing us any. China reported GDP steady at 7% for the first quarter, and while I might agree with that if I were held at gunpoint, I'd have to be sure that the gun was loaded.

The components look sick:


This I believe:

Because of this:

 
If you read the link above thoroughly, I think you'll goggle at the "steady growth" theory. too. 

Comments:

So we're on track for onset of recession in, what, early 2016?

 
I hope not, Neil. Time tends to cure these things - if they are curable.

Both auto sales and housing have to stay strong probably to avoid it.

Low gas prices have helped consumer spending power when it was most needed.
 
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