Tuesday, February 10, 2015

The latest statistics on industrial production show a slight drop on the month to December. Output remains higher than it was in December 2013, but lower than in February of last year - and this suggests that the annual rate of growth may well turn negative over the coming few months. Indeed my neural network forecaster of this variable continues to suggest that this will be the case, and that we shall continue to see a (quite pronounced) drop in industrial output over the coming 18 months.

Industrial output only represents a small fraction of total output in the economy, and the movement in this series should not unduly cause alarm. But the trend is in line with the more general observation that the rate of GDP growth peaked in the spring of last year and that the coming year will see growth that is considerably more modest.