Weak Industrial Production Numbers Confirm Manufacturing Recession


Industrial Production fell 0.3% as expected, but revisions subtract another 0.1%. Weather was again a factor.

According to the Fed's Industrial Production and Capacity Utilization report, Industrial production declined 0.3 percent in January.

Key Points

  • Industrial production declined 0.3 percent in January, as unseasonably warm weather held down the output of utilities and as a major manufacturer significantly slowed production of civilian aircraft.
  • The index for manufacturing edged down 0.1 percent in January; excluding the production of aircraft and parts, factory output advanced 0.3 percent.
  • The index for mining rose 1.2 percent. At 109.2 percent of its 2012 average, total industrial production was 0.8 percent lower in January than it was a year earlier.
  • Capacity utilization for the industrial sector fell 0.3 percentage point in January to 76.8 percent, a rate that is 3.0 percentage points below its long-run (1972–2019) average.

Boeing Restart

One piece of good news: Boeing to Resume Max Production Before Flight Ban Is Lifted

Boeing Co. will resume production of the 737 Max before the best-selling plane is allowed back in the air as the company attempts to recover from one of the worst crises in its 104-year history.

Boeing expects global regulators to start clearing the aircraft to fly in the middle of this year, though senior sales executive Ihssane Mounir said Wednesday at the Singapore Airshow that the timings of their decisions may be different. Vice president of commercial marketing, Randy Tinseth, outlined the timetable to restart manufacturing and said any resumption would begin slowly.


Leeham Pontifications: A few rays of sunshine emerge in MAX crisis

  • Worries about the production shutdown, its duration and lack of communication from Boeing prevailed. But there were in fact rays of sunshine beginning to break through the dark clouds of the last year. Some suppliers—not many—reported that they’ve been told to begin shipping parts and components as early as March 1.
  • This gives hope that production will resume in April.
  • To be sure, the good news is mixed with a lot of bad news for suppliers. Some laid off workers and more layoffs are yet to come.

Boeing will provide a manufacturing lift but manufacturing is highly unlikely to match the pre-recession peak before the next recession hits.

Mike "Mish" Shedlock

Comments (13)
No. 1-5

Was there a recession in 2015?


Even a small end user preference for competing airlines not flying MAXes, will make the MAX a hard sell for Boeing.

Of course, in Dystopia, should the likes of Expedia choose to help people make informed decisions by allowing searches based on equipment, they will no doubt be effectively silenced by the regime. Who will call such things "fake news", or whatever happens to be the fashionable excuse du jour, for encouraging ambulance chasing garbage to abuse Dystopia's pathetic joke of a once-was "legal" "system."

There's also the problem of Boeing having to help insure any airline ordering large numbers of them, against fallout from even the most minuscule mishap in the future. Whatever happens to a MAX, will be blamed on the plane for years to come. No airline wants to be stuck with a whole fleet of them, unless all risk from doing so, is very much insured against.

Overall, someone has to pay for all the, even if only perceived, risks inherent to flying living people in the thing. And since airlines have the option, hence leverage, to look elsewhere, that someone will have to largely be Boeing.

Tony Bennett
Tony Bennett

Looming over EVERYTHING -

(CNN)As an outbreak of a novel coronavirus has swept through Hubei province, China, the US Centers for Disease Control and Prevention has been preparing for its worst case scenario -- a widespread outbreak of illnesses in the United States.

"Right now we're in an aggressive containment mode," CDC Director Dr. Robert Redfield told CNN's Chief Medical Correspondent Dr. Sanjay Gupta in an interview on Thursday.

"We don't know a lot about this virus," he said. "This virus is probably with us beyond this season, beyond this year, and I think eventually the virus will find a foothold and we will get community-based transmission."


Looks like slow growth to me. Perhaps the next quarter or two will approach zero, however, I still expect overall 1% growth on average going forward. The “powers that be” will continue to do “whatever it takes” to keep the balls in the air.

The impact of the coronavirus is a big unknown at this time. The longer it takes to get it under control, the bigger the impact. It is possible that it could indeed cause a recession in some economies in the first half of this year. In the long run, I think it will be a minor historical footnote (similar to sars).


This pullback on the chart looks shallower and choppier than the start of the downturns in 2000 and 2008. This pullback looks more like the one in 2014. If manufacturing recovers from this pullback, I would expect it to be shorter duration and shallower slope than the advance out of the 2016 lows.

Global Economics