Wednesday, February 15, 2012

Industrial production number skewed by warm weather

US industrial production number missed pretty badly this morning with a print of 0% vs 0.7% expected. What's behind such a large miss? It turns out it was all the warm weather we've been having in the US that skewed the result.

The worst performing sectors have been utilities (-2.5%) and mining (-1.8%). The higher than normal temperatures reduced demand for heating, with utilities' output ending up lower than expected. Utilities in turn reduced their orders for coal (see coal price chart below), driving down the mining sector output.

NYMEX Spec Physical Fixed Coal 1-month (Bloomberg)

The remainder of the industrial production numbers were as expected with 0.8% increase in manufacturing and 1.7% increase in durables, of which autos were the largest contributor.
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