Wednesday, May 11, 2016

Industrial production rose slightly from February to March, but the higher baseline figure from a year ago means that output in this sector has nevertheless fallen over the past year, by some 0.3%. The March data confirm that, for the second successive quarter, production has declined. This means, in effect, that the industrial sector is in recession. My forecasting model (see graph below) suggests that the slowdown is likely to continue for some time.

Manufacturing comprises most of the output in the production industries, and has been in the doldrums for some considerable time. Output in this sector is now some 2.2% below the level achieved at its post-recession peak at the beginning of 2012 - and is indeed no higher than was achieved in April 1989. The recovery remains dangerously unbalanced.