Yesterday’s IPI report from underscored the slowdown that occurred in 2Q 2011, despite an upward revision in the data for April (log annual and monthly changes; seasonally adjusted):
May’s IPI fell 5.2% in annual log terms, and 2.4% below April’s. If there is anything positive to take away from May’s data is that unlike April, manufacturing showed positive growth. The slowdown in May was mainly driven by the steep decline in mining output, which crashed 22.5% in annual log terms.
From a statistical forecasting viewpoint, May’s numbers don’t change matters much:
(This forecast BTW is generated using a simple (1,0) ARMA model with seasonal dummies, with the IPI as an additional explanatory variable).
The generated numbers point to 4.5% real GDP growth in annual log terms, but –2.8% in seasonally adjusted annualised terms. This is somewhat worse than 3Q 2010, which saw a similar slowdown. Both numbers were about the same from that generated by April numbers alone. Unless there’s a fantastic pickup in June, that looks like where the numbers will stay.
Technical Notes:
May 2011 Industrial Production Index Report from the Department of Statistics
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