INDICATOR: November Industrial Production
KEY DATA: IP: +1.1%; Manufacturing: +0.6%
IN A NUTSHELL: "With manufacturing activity ramping up, it looks like whatever slowdown we had is well behind us."
WHAT IT MEANS: The economy seems to be picking up steam, despite all the crying coming from retailers. Industrial production surged in November, helped greatly by a jump in both energy production and utility output. Given how cold it has been in December, that is likely to be the case again when this month's numbers come out. But what really matters, at least to me, is the manufacturing output data and they were strong. Gains were in most sectors as more consumer goods, materials, energy products, construction and business supplies were produced. The only weakness was in business equipment and defense. Sequestration has its costs. The strong vehicle sales led to firms increasing assembly rates and high-tech industries also pushed out more product. In other words, output was expanding across all aspects of the economy.
In other news, third quarter productivity was revised upward sharply, mirroring the stronger growth in the latest GDP report and that led to an even larger decline in labor costs. But real hourly compensation continues to tank and if the retailers are wondering why they have yet to see a very, merry Christmas shopping season, they should look no further than the income numbers for an explanation.