October 2013 Industrial Production

Industrial output appears to be moderating a little (log annual and monthly changes; seasonally adjusted):

Growth has fallen off considerably on an annual basis, no thanks to continued contraction in mining output. The drop in electricity production growth is also a concern, as that’s a good indicator for private consumption.

Viewing the indexes themselves, a slightly different picture emerges (index numbers; seasonally adjusted):

Mining appears to have bottomed out, while manufacturing output has been steadily climbing over the past three years. But the slowdown in electricity production is much more pronounced.

Overall however, there’s a more than decent chance we’re going to see much stronger GDP growth in 4Q2013 (log annual changes):

Current quarter GDP (based on Ocotber IPI), implies GDP growth of 5.8% (± 2.2%), well above the 5.0% recorded for 3Q2013 and similar to the jump in growth in 4Q2012. My weighted average forecast is a lot milder, at between 4.9%-5.4% (±1.2%), which would give a full year growth number of 4.6%-4.8%, which more or less in line with BNM’s latest expectations.

US recovery is gaining some strength, but both Japan and especially Europe are faltering again. Other regional economies appear to be picking up (notably Korea), so the overall external picture is the healthiest it has been in more than two years. I think that argues for risks in these forecasts to be on the upside.

Technical Notes:

October 2013 Industrial Production Index report from the Department of Statistics (warning: pdf link)