The Federal Reserve’s industrial production (IP) index measures real output from manufacturing, mining, electricity and gas company facilities located in the United States. These sectors are thought to be sensitive to consumer demand and so some leading indicators of GDP use industrial production figures as a component. Had the coronavirus not emerged early in 2020, the latest figures would have added some weight to the argument the downtrend which began in late-2018 was over.
According to February’s figures released by the Federal Reserve, US industrial production increased by +0.6%, higher than the +0.4% increase which had been expected and a complete reversal of January’s revised figure of -0.5%. On an annual basis, the growth rate improved from January’s revised figure of -1.0% to 0.0%.
National Australia Bank Head of FX Strategy Ray Attrill said, “Economic data remains a second-order concern for markets and there wasn’t much reaction to…stronger-than-expected US industrial production…”
The report came on the same day as January’s JOLTS report and February’s retail sales figures were released. Bond yields jumped across the curve but probably more as a result of a general move in financial markets. By the close of trade, the 2-year Treasury yield had gained 13bps to 0.49%, the 10-year had jumped a massive 35bps to 1.08% while the 30-year yield finished 36bps higher at 1.68%.