If the jobs report is the Queen of Coincident Indicators, industrial production is the King. It, more than any other metric, is found at the turning points where recessions both begin and end.
This morning’s report of industrial production for August shows that the recovery from the bottom of the coronavirus recession has come close to stalling out.
Overall industrial production grew by 0.4%, while July was revised higher by 0.5%. Manufacturing production grew just under 1.0%. July was likewise revised higher by 0.6%. Here are the overall totals:
The good news is that manufacturing production has gained back almost 70% of its decline from March. Overall production has gained a little over half of its decline.
The bad news, as is easily seen from the trajectories of the recoveries, is that there has been a sharp deceleration in them since June.
Since production generally follows consumption (but is considerably more volatile), it is not a surprise that industrial production (blue) has continued to recover in the face of a total recovery in real retail sales (violet) (shown YoY):
But with the expiration of supplemental Congressional unemployment aid, like most observers I am expecting that consumption rebound to end – and that will likely show up in the ending of the industrial rebound as well in several months.