What is the Industrial Production Index?
Industrial Production Index measures the levels of production in manufacturing, mining, electric, and gas industries relative to a base year. A base year is the first of a series of years in an economic or financial index. This monthly economic indicator is published in the middle of the month by the Federal Reserve Board. In addition to productions levels, it measures capacity, capacity utilization, and estimated production levels that can be sustainably maintained.
Why is the Industrial Production Index valuable?
The Industrial Production Index breaks down growth and declines within specific industries and the overall economy. The capacity utilization captured by this index is a great indicator of the strength of demand for products generated by the manufacturing, mining, electric, and gas industries. Demand for durable and nondurable goods, mined materials, and utilities tends to be weaker when capacity utilization is lower and stronger when capacity utilization is high.
What should you do?
Watching the Industrial Production Index will give you a solid indication of demand trends for durable and nondurable goods, mined materials, and utilities. As demand for these items can influence pricing, across industries and materials, the Industrial Production Index can help as you make strategic decisions for your business. Majestic’s CORE Report follows the Industrial Production Index; along with other indicators every week to see where the market stands.