Sep 18, 2019

Industrial production is the latest piece of strong U.S. economic data

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Data: Board of Governors of the Federal Reserve System; Chart: Axios Visuals

U.S. industrial production jumped by the most in a year last month, rising by 0.6% and showing that perhaps the trade war isn't having as dire an impact on the U.S. economy as feared.

Why it matters: Industrial production is a measure of factory, mining and utility output, and came in well above economists’ expectations.

  • “This sector cannot be considered strong, but damage from slow growth abroad and trade tensions has not been severe so far,” Daiwa Capital Markets economist Michael Moran said in a note to clients.

The big picture: The U.S. manufacturing sector remains in a recession, largely as a result of the U.S-China trade war, but Tuesday's numbers show that it has not yet fallen off a cliff.

  • The Fed's industrial production index also remains above where it was as recently as 2015 when it last experienced a sustained downturn.

Between the lines: The pickup in August's data was due almost entirely to the mining sector, which rose 1.4%. The GM strike could complicate things for the September reading, as it could idle factories and impact the overall reading.

Go deeper: The U.S. coal industry is choking

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Trump attacks Fed as U.S. manufacturing index plunges to decade low

Trump and Jerome Powell. Photo: Drew Angerer/Getty Images

President Trump on Tuesday renewed his attacks on the Federal Reserve and Chairman Jay Powell, after a key U.S. manufacturing gauge signaled the second consecutive month of sector-wide contraction.

"As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!"
Go deeperArrowOct 1, 2019

Business leaders spooked by Trump's manufacturing slump

Data: Bureau of Labor Statistics; Chart: Axios Visuals

American manufacturers rode a wave of optimism after President Trump took office, clinging to his promises to revive the industry and bring back jobs.

Yes, but: The politically important sector is being choked by his trade war with China, and business leaders tell Axios that the tariffs threaten to upend the economy if not addressed soon.

Go deeperArrowOct 6, 2019

Services data is following manufacturing

Data: Institute for Supply Management; Chart: Axios Visuals

Bullish market analysts and money managers have been somewhat dismissive of deteriorating manufacturing data this year and its importance, arguing that the sector makes up a minute portion of the U.S. economy.

Why it matters: While that is true, manufacturing is a leading indicator, and more bearish investors have insisted the sector's decline would drag the rest of the economy down with it.

Go deeperArrowOct 4, 2019