US industrial production in March: Bad, bad and bad - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Apr 18, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Rob Carnell, Chief International Economist at ING, notes that the US headline industrial production fell 0.6%MoM, manufacturing fell, utilities production fell and mining fell as well.

    Key Quotes

    “Following a 0.6% decline in February, which we felt was dominated by warmer than usual weather depressing utilities output, a small bounce in activity, or at least a smaller decline in overall industrial production looked a sensible forecast, backed up by a slight bounce in the manufacturing ISM index.

    But production fell a further 0.6% MoM, utility production fell less than in February, but still by a sizeable 1.2% MoM, while mining (for which read in large part - shale extraction) fell at an accelerated pace of 2.9% (-1.0% in Feb) and manufacturing also accelerated its decline falling by 0.3% MoM, with particularly large fall (-1.6% MoM) in motor vehicles and parts. If that were not bad enough, even the February figures saw some small downward revisions.

    This data almost brings to an end the major activity releases for the first quarter, and the net result is not a good one. On our rough reckoning, it will be hard for 1Q16 GDP to exceed 1.0% continuing the run of soft data that delivered only a 1.4% QoQ rise in economic activity in 4Q15. So Economic growth continues to slow, and the inflation data has also been a little softer of late.

    Put all this together and the case for an April rate hike is non-existent, with prospects for a June hike hanging in the balance and needing a meaningful pick up in activity data over the coming months. We still prefer the idea that the Fed will keep policy unchanged until 3Q16.”
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