Industrial Production On The Rise

Unequivocal strength is the message from industrial production which rose 0.7 percent in April on top of an upward revised 0.7 percent gain in March. Manufacturing production moved 0.5 percent higher to beat Econoday's consensus by 2 tenths. Mining once again leads the gains with a 1.1 percent surge in the month with utility output also positive at a 1.9 percent gain.

The standout gain in the manufacturing comes from business equipment where volumes rose 1.2 percent and which point to second-quarter strength for business investment. Production of consumer goods is right behind with a 0.9 percent gain. And the gains in manufacturing come despite a step back for vehicle production which fell 1.3 percent. Showing no tariff effects are construction supplies which rose 0.3 percent in the month.

Mining has been the strength of this report for the past year, reflected in the year-on-year volume gain of 10.6 percent, a contrast to manufacturing where the year-on-year comparison is up only 1.8 percent. The yearly gain for utilities is 6.0 percent.

Capacity utilization may be showing a little stress, rising 4 tenths to 78.0 percent overall against, however, a sharply downward revised 77.6 percent in March. There is clearly more slack in manufacturing where the rate is 75.8 percent, up 3 tenths in the month.

Manufacturing in this report may finally be coming alive, joining the host of small sample surveys which have long been reporting strength and moving perhaps in line with acceleration underway in the factory orders report. Though tariff effects are a wildcard, manufacturing looks to be an outstanding contributor to this year's economic growth.