The US Industrial economy eased off another notch again last week (if pipeline scheduling is correct), amidst continuing strong consumer spending.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) edged lower for its second strait week, dipping to 120.1 (from last weeks 120.2). In its dailies (See the "Part 7" posts on the Investor Village site) the index started off flat on Christmas eve seasonals then firmed sharply as the week progressed.
The Consumption Index put in its fourth weekly gain in a row, climbing to 141.8 (from last weeks 137.8). In its dailies the measure (as last week) was seasonally-soft though still strong relative to prior weeks.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued to accelerate in is resumption of its long-term decline.
Overall, the economy looks to be continuing its recovery from its November "micro-recession", as gas-flow-estimated consumption has regained its composure. Within the individual sectors tracked (see "Part 8" posts on the Investor Village site) the metals group (and in articular the steel group) continue to show good progress in recovering from their November-lows.
The steel group sampling (now up to 174 mmcf/day in December vs its 147 mmcf/day 16-month low in November) is especially reassuring as it has been a bellwether of the recession over the past couple of years (as it should... given the prominent usage of metals used within industrial production, especially in durable goods).
One warning sign that remains, however, is the Food group, which leapt in November to surplus and is now approaching 2008-recession highs. The Food group has a contra-relationship with consumption, and gains to the measure generally coincide with weakness in consumer spending. I take it as a sign of deep nervousness within consumers, who (given the strength in the consumption index) are presumably continuing to spend even while nervous... hopefully reflecting unfounded nervousness in the future of others, rather than themselves.
Overall, the US industrial economy looks (as last week) to be firmly underpinned by an excess of consumption over production, the recent surge in consumption, and the resumption of declining Inventories measure.
-Robry825
