Industrial production still strong, both in the US and globally
The following commentary is by Scott Grannis, Chief Economist at Western Asset Management.
-- David M Gordon / The Deipnosophist
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U.S. industrial production fell by 0.6% in September, but is still up 4% over the past year, even after factoring out the Katrina-related decline of last September; this is about the same pace as the past 3 years. The Federal Reserve estimates that capacity utilization at U.S. factories is about 82%, a level that in the past has tended to provoke a tighter monetary response from the Fed than we have seen to date (in terms of the real Fed funds rate).
European industrial production has accelerated noticeably in the past year, up from almost flat growth last summer to 5.2% over the past year. Japanese industrial production expanded 5.9% in the 12 months ended August, decisively breaking out of a slump which began in the early 1990s. Overall, this amounts to very healthy supply side conditions in the global economy.
Despite all the talk of a collapse in commodity prices, raw industrial commodity prices are setting new all-time highs almost every day, and are up fully 26% over the past year. This suggests that the demand side of the global economy is also quite strong.
-- David M Gordon / The Deipnosophist
===============================
U.S. industrial production fell by 0.6% in September, but is still up 4% over the past year, even after factoring out the Katrina-related decline of last September; this is about the same pace as the past 3 years. The Federal Reserve estimates that capacity utilization at U.S. factories is about 82%, a level that in the past has tended to provoke a tighter monetary response from the Fed than we have seen to date (in terms of the real Fed funds rate).
European industrial production has accelerated noticeably in the past year, up from almost flat growth last summer to 5.2% over the past year. Japanese industrial production expanded 5.9% in the 12 months ended August, decisively breaking out of a slump which began in the early 1990s. Overall, this amounts to very healthy supply side conditions in the global economy.
Despite all the talk of a collapse in commodity prices, raw industrial commodity prices are setting new all-time highs almost every day, and are up fully 26% over the past year. This suggests that the demand side of the global economy is also quite strong.
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Labels: Economics
posted by David M Gordon | 4:51 PM
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