Thursday, October 16, 2008

Production Pullback: Industrial Production September 2008

Today, the Federal Reserve released their monthly read of industrial production showing truly historic declines to the total index and across many industries, particularly for those related to consumer spending, construction and business vehicles, resulting in the most significant year-over-year decline to total aggregate production since December 2001 dropping 4.46% as compared to September 2007 and 2.81% compared to last month.

“Final product” consumer durable goods continue to show weakness falling 11.72% as an aggregate on a year-over-year basis, with particularly significant declines coming specifically from home appliances, furniture and carpeting which declined for the twenty ninth consecutive month by 17.66% on a year-over-year basis.

Construction supply production has been showing the most severe contraction to wood products seen in at least the last 20 years.

Although automotive production has been showing weakness since the middle of 2004, business vehicle production is now showing a stark contraction.

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.