US Industrial Production in March: Bad, Bad and Bad - ING
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.”
