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The Economy

November 18, 2014 | Weekly Commentary

Last week the good news on the economy outweighed bad news. The good news:

  • Industrial production fell 0.1% however industrial production remains on a positive trend.
  • Manufacturing also rose 0.2%, led by strong gains in machinery (+1.3%), computer and electronic products
  • Excluding vehicles, manufacturing rose 0.2%.
  • Core industrial production, which excludes energy, high tech, and vehicles, rose 0.2%, as all of its components
  • On a year over year basis, industrial production is up 4.0%, consistent with continued moderate output expansion.
  • The Empire State General Business Conditions Index rebounded 4.0 points to 10.2 in November, indicating manufacturing activity in the region strengthened somewhat. New orders and shipments both advanced, but hiring decelerated and the average workweek shortened.
  • The outlook for the next six months improved to its best level since January 2012. The capital expenditure outlook was the most positive in over two years.
  • Prices were near-flat for the month and are expected to remain steady in the near-term

And the disappointing news on the economy:

  • Mining, which accounts for about 16% of total industrial production, dropped 0.9%, the most in a year, likely driven by the sharp decline in oil prices. Energy output, which includes oil and gas well drilling, fell 0.8%.
  • Utilities output fell 0.7%, its third decline in the past five months.
  • The capacity utilization rate fell 0.3 percentage points to 78.9%, below the consensus of 79.3%, and 1.2 points below its 1972-2013 average. This indicates there is still some production slack in the economy, which puts downward pressure on inflation. Capacity utilization slipped across all three main categories.

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