Industrial Production Steadily Growing

Consumer durable goods industrial production in January was up 5.8 percent compared to January 2010. After slowing significantly from June to September 2010, the one-month rate of change has leveled off around 5 percent. Despite the relatively constant rate of growth shown by the one-month of rate of change, the annual rate of change appears to have peaked in December 2010 and should continue to show a slowing rate of growth in the upcoming months (just as I have repeatedly indicated in my monthly e-mail newsletter on machine tools).

In order for the annual rate of change to remain flat in February and March, consumer durable goods industrial production would have to grow by 11.5 percent and 13.5 percent, respectively. I think this is quite unlikely. Therefore, it is safe to assume that consumer durable goods industrial production has reached its peak rate of growth and will be entering a period of slowing growth for much of 2011.

Since consumer durable goods industrial production provides a good approximation of what is happening in the metalworking industry, it appears that we could also draw the conclusion that the industry has reached its peak rate of annual growth. This isn’t all bad though, since the current rate of annual growth is at its highest since the mid-1980s. Even with some slowing through the first quarter, the annual rate of growth in consumer durable goods industrial production will still be higher than at any time since the mid-1990s.