Industrial Production Unexpectedly Declines

Industrial production unexpectedly slipped in March, down 0.1% vs an expected gain of 0.3%.

The Federal Reserve Industrial Production and Capacity Utilization report was far weaker than expected this month.

Industrial production edged down 0.1 percent in March after edging up 0.1 percent in February; for the first quarter as a whole, the index slipped 0.3 percent at an annual rate. Manufacturing production was unchanged in March after declining in both January and February. The index for utilities rose 0.2 percent, while mining output moved down 0.8 percent. At 110.2 percent of its 2012 average, total industrial production was 2.8 percent higher in March than it was a year earlier. Capacity utilization for the industrial sector decreased 0.2 percentage point in March to 78.8 percent, a rate that is 1.0 percentage point below its long-run (1972–2018) average.

Auto production fell 2.5%. In the first quarter, auto production fell 12.8% at an annualized rate, the biggest decline in almost eight years.

Industrial Production and Capacity Utilization

Bond Market Reaction

Bond yields rose on this weakness. The 30-year long bond is at 2.994%, again flirting the the 3 percent level.

The 5-year to 3-month inversion is nearly gone. The former is 2.404, the latter is 2.436 a spread of -3.2 basis points.

Hot retail sales numbers coming up on Thursday?

This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.