Production Growth Remains Strong

According to the Federal Reserve, the durable goods industrial production index was 112.1 in November 2014. In each of the last three months the index has been above 112.0, which is just shy of the all time high of 113.3 set in June of this year. And, November was the 22nd consecutive month that the index set a record high for the given month. The month-over-month rate of growth was 5.6%. The annual rate of growth remained at 5.0%. 

In November, my fore durable goods industrial production forecast was too low by just 0.1%. My forecast calls for the rate of growth in durable goods production to remain above 110.0 through June 2015 with a slight acceleration in the rate of growth to 5.5% in early 2015. By the summer of 2015, I expect the rate of growth to have decelerated to 4.1%.

The best leading indicators for durable goods production are housing permits, capital goods new orders, and consumer durable goods spending. Housing permits are growing at a decent rate. The rate of growth in housing permits has slowed significantly but may bottom out soon. Capital goods new orders continue to grow at a strong rate. Consumer durable goods spending is still growing at a relatively strong rate and above its historical average. 

We track industrial production and its leading indicators for a number of industries. Click on the links below to see how each industry is faring.

Accelerating Growth: aerospace; custom processors; electronics/computers/telecommunications; food/beverage; furniture manufacturing; machinery/equipment; medical; military; off-road/construction machinery; petrochemical processors; plastic/rubber products; primary metals; printing; textiles/clothing/leather goods

Decelerating Growth: appliances; automotive; construction materials; durable goods; forming/fabricating (non-auto); HVAC; industrial motors/hydraulics/mechanical components; metalcutting job shops; oil/gas-field/mining machinery; power generation; pumps/valves/plumbing products; ship building; wood/paper products

Accelerating Contraction: hardware

Decelerating Contraction: none