US Industrial Production: Conditions remain weak - Wells Fargo

Data released today showed that Industrial Production dropped 0.15 in March, against expectations of a modest increase. Analysts at Wells Fargo point out that the March report suggests that conditions remain weak, but at least for now does not suggest a marked deterioration.

Key Quotes: 

“The U.S. industrial sector continues to struggle. Total production ticked down 0.1% in March, missing expectations that production would at least hold steady amid tentative signs that the global growth environment is stabilizing after slowing this past year.”

“Manufacturing activity still looks to have been soft in recent months. Output in this sector, which accounts for about three-quarters of all industrial production, was unchanged in March. That marks an improvement from the prior two months when activity contracted, but suggests that the weakening in global growth since late last year and policy uncertainty on issues like trade continue to weigh on output.”

“Industrial production is one of four indicators used by the National Bureau of Economic Research, the official arbiter of U.S. recession dates. Therefore, the sharp slowdown in production the past few months raises some concerns about the outlook. While the sector continues to struggle against an unfavorable global backdrop, trade uncertainty and slower domestic growth as fiscal stimulus fades, the industrial sector accounts for only about 15% of value add, meaning it would need to slow sharply to become a broad concern for the U.S. outlook.”