Annual Industrial Production Growth Fastest Since February 2011

 

The consumer durable goods industrial production index was 93.4 in August 2012. This is about the average level of the production index in 2012. The annual rate of change is growing at the fastest rate since February 2011. Since January 1970, the annual rate of change has grown faster than August 2012 slightly less than 10 percent of the time. Durable goods manufacturing is in a very strong period of growth. However, compared to August 2011, industrial production was 5.7 percent higher in August 2012. This is the slowest rate of growth month over month since November 2011. It is likely that the annual rate of change will peak during the fourth quarter of 2012. Consumer durable goods industrial production leads capital equipment spending by 12-18 months. Therefore, we should see continued growth in capital equipment spending throughout 2013.

 

A good leading indicator for consumer durable goods industrial production is consumer durable goods spending. Spending levels remain at all-time highs. The month-over-month rate of change in spending in July was 8.0 percent, which is well above the average rate of growth. Also, the annual rate of growth in spending has accelerated the last three months. This indicates that consumer durable goods industrial production should continue to remain at a high level.