U.S. Industrial Production Plunge

In my commentary to the latest employment report, industrial production was likely to fall significantly given the reported plunge in hours worked in manufacturing. And fall significantly it did, 1.1% to be more specific compared to the previous month and 1.5% compared to August 2007. Manufacturing alone fell 1.0% compared to the previous month and 1.9% compared to August 2007. Also, previous industrial production numbers were downwardly revised by a total of 0.2%.

Mining have long been the strongest component of industrial production, and while it fell less than manufacturing and utilities, it too fell 0.4%. It is however up 3.5% compared to August 2007. If the downturn in commodity prices is sustained (increasingly likely after the Lehman collapse) then this source of strength will be removed too.