Description:

Provides a snapshot of industrial output in the U.S. and records its spare capacity

Released:

By the Federal Reserve at 9:15am around the fifteenth of the month and reports about the prior month’s conditions

Calculation:

The methodology in calculating Industrial Production is quite complex. The main take home here is that the Fed calculates this index after analyzing data on 295 industry segments including manufacturing, mining, electric utilities, and gas industries. The segments are then given weights based upon their importance to the economy and these weights do change from year to year as deemed appropriate by the Fed.

Key Point:

Any indicator released by the Fed is given importance and Industrial Production is no different. Products manufactured in the U.S. only account for roughly 1/5 of GDP, whereas services account for the rest of the difference. This does not diminish the importance of Industrial Production because industrial output is highly correlated to GDP growth. The reason being is that manufactured goods are extremely sensitive to economic conditions whereas services such as dental care do not fluctuate for the most part.

Release site: Click here