Industrial production fell -0.2% in September showing a continued contraction of the U.S. economy.
The manufacturing component fell -0.1% for a second straight decline and the fourth decline in five months. The ok news is that industrial production was revised upward for August, from an initial decline of -0.4% to -0.1%. But the improvement was due to sharp upward revisions to the utility and mining components which are more defensive sectors.
Motor vehicle production came in with a 0.2% gain for September. The good news is that vehicle production came in with a year over year gain of +9.4%. This suggests slightly growing consumer purchasing power as domestic demand for higher ticket items like new automobiles is on the rise.
Consumer goods, another read on the domestic consumer, rose +0.2% in September for a year over year gain of +2.6%.
Stock traders track the monthly Industrial Production report because it shows how much factories, mines and utilities are producing. Even though the manufacturing sector accounts for less than 20 percent of the economy, it correlates heavily with the business cycle and hence sector rotation.