August 2013 Industrial Production

Too good to last? The IPI has come back down to earth (log annual and monthly changes; seasonally adjusted):

It’s a six point drop between July and August, 4.7% in log terms. And the contraction is really across all the sectors, though electricity and manufacturing production were particularly steep. That leads me to believe this is largely temporary – the Hari Raya  effect, even though the DOS numbers have been seasonally adjusted. Mining was pretty steep to, but funnily enough, almost solely from a drop in natural gas output.

Be that as it may, the prognosis for 3Q2013 GDP growth has to be downgraded (log annual changes):

The IPI based forecast is flashing 4.1% growth in log terms, or a little worse than 2Q2013. Personally, I don’t think it’ll end up that low, but with such wide error bands (1 standard error = 1% growth), it won’t be too big a surprise if the actual growth number comes in well off the forecast. The weighted average forecast is still sitting at 4.7% (± 1%).

Technical Notes:

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