Industrial Production Increases in January

When the economy is making any kind of economic recovery, one of the first areas that will immediately show increasing in demand for various goods or services is: industrial production. This is where factories and mines are increasing their overall output, to reflect what is occurring within the economy. Recently the Federal Reserve released the latest numbers on industrial production, which show that it increased by .9%. This is significant, because it is following a trend that occurred, where production has been consistently increasing (as there was .7% increase the December reading). Yet, when you dig a little deeper in the number, there are some conflicting readings, most notably capacity utilization. This tells the overall rates in which plants are being used to produce the various goods and services. In general, a reading above 80 shows that factories and mines are working at the historical average of output, with the current number coming at 72.6 (this is up from the bottom seen last June of 63)

What all of this shows; is that manufacturing is slowly starting to recover. As the early signs of increases in business and consumer spending are taking place. Evidence of this, can be seen by looking a little further in the report; with Ford planning on increasing production by 58% and Eaton (the manufacturer of valves/ hydraulics) seeing an increase in demand. Over the course of time, this will help provide the necessary ingredients for long term growth. However, it is still a little early until a full recovery takes shape. What will more than likely appear is a period of flat growth; followed by the recovery that so many are waiting for.