Production Grows at Slowest Rate since Jan. 2010

The durable goods industrial production index was 111.7 in April 2015. In eight of the last nine months the index has been above 110.0. April was the 28th consecutive month that the index set a record high for the given month. However, the month-over-month rate of growth was 2.6%, which was the slowest rate of growth since January 2010. January 2010 was the first month of month-over-month growth in the production index since the financial collapse happened. So, basically, the April 2015 industrial production index had the slowest rate of growth since the recovery in manufacturing began. The annual rate of growth decelerated to 5.0%, which was the third straight month that growth had decelerated.

Since starting to forecast industrial production in August 2014, I have never missed by more than 0.9%. I think growth in production will continue to decelerate in 2015. By year end, I think production will have increased 1.3% compared with 2014.

The best leading indicators for durable goods production are housing permits, capital goods new orders, and consumer durable goods spending. Housing permits seemed to have bottomed and are poised for accelerating growth. Capital goods new orders continue to grow at a strong rate but the rate of growth is clearly decelerating. 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; automotive; construction materials; custom processors; HVAC; industrial motors/hydraulics/mechanical components; petrochemical processors; plastic/rubber products; power generation; printing; textiles/clothing/leather goods; 

Decelerating Growth: appliances; durable goods; electronics/computers/telecommunications; food/beverage; forming/fabricating (non-auto); furniture manufacturing; machinery/equipment; medical; metalcutting job shops; military; off-road/construction machinery; oil/gas-field/mining machinery; primary metals; pumps/valves/plumbing products; ship building; wood/paper products

Accelerating Contraction: none

Decelerating Contraction: hardware