March Industrial Production and Capacity Utilization report was released today. Analysts expected a m/m decline of -0.1%. Unfortunately, analysts were wrong, again.
Industrial production came in above expectations rising 0.3% in March, at annual rate of 1.6% compared to the same month last year while the capacity utilization rate for total industry in March – rose 0.2 percentage point to 80.5% from 80.3% consensus. The production of high-tech equipment also grew 2.6% up 26.5% versus last year.
Additionally, the output of business equipment increased 0.6% in March and rose at an annual rate of 4.4% in the first quarter of fiscal ’08 after having advanced at a rate of 1.9% in the fourth quarter of fiscal ’07. The output of nondurable materials also moved up 0.6% along with the production of energy materials climbed 1.3%.
The upside in March clearly undermines the theory of a U.S. economy currently in recession. Worth noting is that during the 2001 recession industrial output did not climb even once.
We can allow ourselves to be influenced by the daily news headlines and basically get whipsawed left and right along the way – or, we can read the tape which tells it all.
Bottom line: don’t try to assess the situation and further growth prospects of the US economy based on financial headlines. The figures and price drops don’t support recessionary levels and cannot be found in the fundamentals and outlook of the current state of the economy. As I have stressed it in more than one occasion : Outside the financial sector, US economy is quite healthy.
The market’s undeniable message is that better days are ahead. Take advantage of it.
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