Friday, January 09, 2015

The latest statistics on industrial production show a further (slight) month on month fall in November, though output in the production industries is still some 1.1% higher than it was in November 2013. The detailed monthly series indicate that growth in this sector has been trending down since May 2014 (when it peaked at 2.8%).

The publication of these data allow me to update my neural network forecast for this series, and the 2 year ahead forecast is shown below. It continues to suggest that the annual growth rate of industrial production will dip into negative territory soon; and that while it will turn the corner quite quickly, it will remain negative throughout the forecasting period.

Trends in industrial production are not necessarily indicative of those in the overall economy - this sector accounts for only about 15% of total GDP. But nevertheless, these data suggest that the recovery reached a peak in the early part of last year and that output growth in the coming year is likely to slow down.