Ex-hurricane trend in September industrial production is positive
As I outlined earlier this week, a reasonable temporary workaround for industrial production unaffected by the recent hurricanes is to average the 4 regional Fed surveys, minus Dallas, plus the Chicago PMI. Over the long run, each +5 in the average of the indexes is consistent with a +.1 in the manufacturing component of industrial production. Because these indexes have been running “hot” this year compared with industrial production, I further suggested subtracting .3 from the result to be confident in a positive trend.
All of these indexes have been reported for September. Here are the numbers:
Empire State: 24.4
Philadelphia Fed: 23.8
Richmond Fed: 19
Kansas City Fed: 17
Chicago PMI: 30.4 (adjusted)*
Interestingly, even the Dallas Fed’s index was positive, at 19.5!
*Since Chicago is on a 0 to 100 scale with 50 being neutral, we subtract 50 from the raw number of 65.2, which gives us 15.2, and then double the result.
The average of the 5 is 22.9.
Dividing that by 5 gives us +.5.
Subtracting .3 gives us +.2.
We can be reasonably confident that underlying trend in industrial production in September, despite the hurricanes, has been positive.