May IPI: Still No Heartbeat

Today's industrial production release has both good news and bad news.

The good news is that the decline in production has essentially stopped (in levels; 2000=100):



The major component indices have all stabilised, which seems to confirm we've reached a bottom, or at least a plateau from which further declines are possible but unlikely.

The bad news is that there's precious little evidence of a recovery as yet (monthly log changes):



Looking at the breakdown of the manufacturing sub-sectors, it appears consumption and contruction related industries are starting to see some action, but electronics and electricals (which has the highest weighting) is still trending downwards. China's huge stimulus package, implemented since December last year, may explain some part of this improvement; but I'm wondering how sustainable that is, since some of it leaked out into asset markets (both house prices and the stock markets have staged impressive recoveries from their lows).

Anecdotal evidence suggests that there may have been a reversal in E&E production last month, so hopefully we'll see some improvement when the data actually comes out for June.