Industrial production flashes recovery, but beware the temporary stimulus

Despite the positive reading for February, industrial production benefited from temporary factors such as inventory restocking and federal stimulus.

By , Guest blogger

  • close
    Industrial production was positive in February, but stimulus played an important and probably temporary role. (Click below to enlarge.)
    View Caption

Today, the Federal Reserve released their monthly read of industrial production showing continued growth in total industrial production.

It's important to recognize that the recently launched Ceridian-UCLA Pulse of Commerce Index continued to successfully predict this month’s year-over-year total production index increase with notable accuracy.

While this report appears very positive and leans in favor of recovery, the significant inventory restocking, "cash-for-clunkers" and "cash-for-home-debtors" and associated dynamics have also played an important and likely temporary role in today's results.

“Final product” consumer durable goods increased 2.34% on a month-to-month basis while jumping some 9.19% above the level seen just one year ago.

It’s important to note that although the Federal Government's “cash-for-clunkers” policy breathed life into the vehicle components of the durable goods category, home appliances, furniture and carpeting still remains weak with a decline 6.20% on a year-over-year basis.

Construction supply production was revised to show a continuous 41 month long decline overall and a 42nd decline to it's wood products component falling 1.49% since February 2009.

The motor vehicle and business vehicle components are clearly indicating that the government sponsored bounce and residual effects provided by the "cash for clunkers" policy appears to have now likely peaked out.

Finally, HVAC (heating ventilation and air conditioning) fell notably in February reflecting the substantial pullback and continued down trend of fixed commercial investment, declining a 3.59% on a year-over-year basis while also revising last months result negative as well.

Add/view comments on this post.

Recommended: Could you pass a US citizenship test?

------------------------------

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...