Today, the Federal Reserve released their monthly read of industrial production showing continued growth in total industrial production.
It's important to recognize that the recently launched Ceridian-UCLA Pulse of Commerce Index continued to successfully predict this months year-over-year total production index increase with notable accuracy.
While this report appears very positive and leans in favor of recovery, the significant inventory restocking, "cash-for-clunkers" and "cash-for-homedebtors" and associated dynamics have also played an important and likely temporary role in today's results.
“Final product” consumer durable goods increased 2.34% on a month-to-month basis while jumping some 9.19% above the level seen just one year ago.
It’s important to note that although the Federal Government's “cash-for-clunkers” policy breathed life into the vehicle components of the durable goods category, home appliances, furniture and carpeting still remains weak with a decline 6.20% on a year-over-year basis.
Construction supply production was revised to show a continuous 41 month long decline overall and a 42nd decline to it's wood products component falling 1.49% since February 2009.
The motor vehicle and business vehicle components are clearly indicating that the government sponsored bounce and residual effects provided by the "cash for clunkers" policy appears to have now likely peaked out.
Finally, HVAC (heating ventilation and air conditioning) fell notably in February reflecting the substantial pullback and continued down trend of fixed commercial investment, declining a 3.59% on a year-over-year basis while also revising last months result negative as well.
The following charts (click for larger) show the overall consumer durable component along with the Home Appliances, Furniture and Carpeting sub-component on both a time series and year-over-year basis, construction supply production with the wood products sub-component, and general and business related vehicle production all overlaid with the last two recessions for comparisons purposes.