Home » Posts tagged 'industrial production'

Tag Archives: industrial production

Even though European power and natural gas prices have subsided this week, Germany, the largest economy in the bloc, still faces historically high energy costs that have forced cuts in industrial output.

The latest example is the world’s largest steelmaker, ArcelorMittal, which released a statement Friday about shutting down two plants and idling one.

Europe’s top steelmaker said two plants in Germany (one in Bremen and the other in Hamburg) would be partially closed at the end of September. A plant in Asturias, Spain, will also be idled.

ArcelorMittal blamed the coming smelter shutdowns on “the exorbitant rise in energy prices,” which is devastatingly impacting the company’s “competitiveness of steel production.” The decision to reduce metal output was also based on “weak market demand and a negative economic outlook” as energy hyperinflation risks sending Europe into a deep recession.

“As an energy-intensive industry, we are extremely affected. With gas and electricity prices increasing tenfold within just a few months, we are no longer competitive in a market that is 25% supplied by imports,” explained Reiner Blaschek, CEO of ArcelorMittal Germany.

Blaschek asked lawmakers to address the historic energy crisis and get prices “under control immediately.” Elevated prices this summer have resulted in a series of smelter closures from other metal-producing companies because high energy costs made production uneconomical.

In Germany, one of every six industrial companies feels forced to reduce production due to high energy prices, a survey by the Association of German Chambers of Industry and Commerce, DIHK, showed at the end of July. Nearly a quarter of the companies forced to reduce production had already done so by end-July, and another one-quarter are in the process of scaling back production due to sky-high energy prices, according to the survey of 3,500 companies from all sectors and regions in Germany.

…click on the above link to read the rest of the article…

Industrial Production Declines Most in 101 Years

May 15, 2020

Industrial Production Declines Most in 101 Years

On the heels of miserable retail sales numbers comes the worst ever industrial production numbers.

The Fed’s Industrial Production report provides another grim look at the Covid-19 wrecked economy.

Total industrial production fell 11.2 percent in April for its largest monthly drop in the 101-year history of the index, as the COVID-19 (coronavirus disease 2019) pandemic led many factories to slow or suspend operations throughout the month.
Manufacturing output dropped 13.7 percent, its largest decline on record, as all major industries posted decreases. The output of motor vehicles and parts fell more than 70 percent; production elsewhere in manufacturing dropped 10.3 percent.
The indexes for utilities and mining decreased 0.9 percent and 6.1 percent, respectively. At 92.6 percent of its 2012 average, the level of total industrial production was 15.0 percent lower in April than it was a year earlier.
Capacity utilization for the industrial sector decreased 8.3 percentage points to 64.9 percent in April, a rate that is 14.9 percentage points below its long-run (1972–2019) average and 1.8 percentage points below its all-time (since 1967) low set in 2009.

No V-Shaped Recovery

As noted earlier today Retail Sales Plunge Way More Than Expected

Despite talk from hopers, even the fed understands there will not be a V-Shaped recovery.

Instead they are promoting a helicopter drop of money. For details, please see Panic Sets In: Fed Promotes More Free Money

China Has Ground To A Halt: “On The Ground” Indicators Confirm Worst-Case Scenario

February 13, 2020

China Has Ground To A Halt: “On The Ground” Indicators Confirm Worst-Case Scenario

Back on Monday, when analysts and investors were desperately seeking clues whether China has managed to reboot its economy from the 2-week long hiatus following the Lunar New Year/Coronavirus pandemic amid the information blackout unleashed by the communist party in the already opaque country, we pointed out some alternative ways to keep tabs of what is really taking place “on the ground” in China, where Xi Jinping has been urging local businesses and workers to reopen and resume output, while ignoring the risk the viral pandemic poses to them (with potentially catastrophic consequences).

Specifically, Morgan Stanley suggested that real time measurements of Chinese pollution levels would provide a “quick and dirty” (no pun intended) way of observing if any of China’s major metropolises had returned back to normal. What it found was that among some of the top Chinese cities including Guangzhou, Shanghai and Chengdu, a clear pattern was evident – air pollution was only 20-50% of the historical average. As Morgan Stanley concluded, “This could imply that human activities such as traffic and industrial production within/close to those cities are running 50-80% below their potential capacity.”

As a reminder, all this is (or technically, isn’t) taking place as President Xi Jinping on Wednesday sought to send a message that progress had been made in bringing the coronavirus outbreak under control and, for most parts of the country, the focus should be on getting back to business. According to state television, Xi chaired a meeting of the Politburo Standing Committee, China’s supreme political body, on the latest developments on the crisis and future policy responses, concluding that there had been “positive changes” with “positive results”.

…click on the above link to read the rest of the article…

Expect “Cascading Global Impact” As Coronavirus Causes Massive Manufacturing Disruptions Worldwide

February 9, 2020

Expect “Cascading Global Impact” As Coronavirus Causes Massive Manufacturing Disruptions Worldwide

China has now placed hundreds of millions of its citizens under quarantine, leaving its economy grinding to a halt.

Workers can’t leave their homes. Factories are idle. Most (if not all) of China’s ports are no longer shipping. International flights are increasingly banned from the country.

As PeakProsperity.com’s Chris Martenson details below, when the world’s #2 economy hangs up a big “CLOSED” sign, that’s going to result in a major negative impact on global trade.

As the manufacturing powerhouse to the world, you’ll be challenged to think of ANY industry that won’t experience serious supply chain interruptions and shortages from China’s woes. For instance, did you know China makes the vast majority of our prescription pharmaceuticals?

A MASSIVE hit to the global economy will directly result from the damage the Wuhan coronavirus is currently doing. And it may get worse, a lot worse, as The Telegraph’s Ambrose Evens Pritchard points out, “the longer Beijing enforces curbs on work and travel, the greater the global economic shock.”

The Chinese economy is 17pc of the world economy and deeply integrated into international supply chains. It was just 4.5pc of world GDP during the SARS epidemic 2003, which some like to use as a reassuring template. You cannot shut down China for long these days without shutting down the world.
Wednesday’s investor euphoria at reports of two new wonder drugs from Zhejiang University show how badly unhinged the market has become. This is not the way that medical science advances. Nor could these anti-virals possibly be ready, in time and at scale, to avert serious economic upheaval.

…click on the above link to read the rest of the article…

“Made in China” Economic Hit Coming Right Up

February 5, 2020

“Made in China” Economic Hit Coming Right Up

Economic contagion due to the coronavirus is underway. Hyundai halted production. Sony, Apple, and Ford issued warnings.

If you can’t get parts, you can’t build cars.

And due to a coronavirus-related manufacturing halt in China, Hyundai to Shut Down Some Production.

Hyundai, the world’s fifth-largest carmaker, announced Tuesday that it was suspending production lines at its car factories in South Korea, one of the first major manufacturers to face severe supply-chain issues because of the coronavirus.
Many auto plants in China have already shut down because of the virus, including factories run by Hyundai, Tesla, Ford and Nissan. Hyundai plants in South Korea would be the first to shut down lines outside of China, and comes as Hyundai has ramped up production in China over the past two decades.

Economic Contagion

The Wall Street Journal comments on China’s Economic Contagion

More than 20,000 coronavirus cases have been confirmed worldwide—an eight-fold increase over the last week—and experts say hundreds of thousands may not yet have been diagnosed. Two dozen or so countries have reported cases, and many have restricted travel from China to limit the contagion. Companies are evacuating employees from China.
U.S. manufacturers such as Ford, Apple and Tesla have temporarily halted production. One-sixth of Apple sales and nearly half of chip-maker Qualcomm’s revenues come from China. So do 80% of active ingredients used by drug-makers to produce finished medicines. Because China is the world’s largest manufacturer and an enormous consumer market, the economic freeze will disrupt supply chains and reduce corporate earnings.
China’s GDP growth was already almost certainly lower than the official figure of 6%, and it is likely to fall by a third or more.

…click on the above link to read the rest of the article…

How US Oil Booms & Busts Hit Industrial Production

November 16, 2018

How US Oil Booms & Busts Hit Industrial Production

Fueled by cheap money and by dashed hopes of high oil prices.

Industrial production in October rose 4.1% from a year ago, the Fed Board of Governors reported this morning. This was in the upper portion of the range since 2010. It was powered in part by the blistering oil & gas production boom that followed the Oil Bust of 2015 and 2016.

This chart shows the percent change in industrial production from the same month a year earlier. The red bars – industrial production falling year-over-year – coincide with the recession in the goods-based economy, the transportation recession, and the Oil Bust:

As part of the overall index, manufacturing rose 2.7% from a year ago, utilities 1.7%, and mining, which includes oil & gas extraction, jumped 13.1%. Oil & gas extraction on its own soared 16.5% from a year ago.

On a monthly basis oil & gas extraction edged down a smidgen over the past two months from a spikey record in August, when it had soared 22.9% year-over-year.

The chart below shows the Industrial Production sub-index for crude oil and natural gas extraction. Note the brief effects of Hurricane Katrina when production along the Gulf Coast was shut down, the Financial Crisis when everything came to a standstill, the subsequent fracking boom, the oil bust in 2015 and 2016, and then the renewed boom. Since the trough of the oil bust in September 2016, the index has surged 31.5%:

It has been a wild ride in the oil & gas sector. At the end of 2008 – following the Lehman Moment – everything came to a halt for a couple of months, but then activity rebounded. Starting in 2011, the fracking boom, fueled by waves of new money trying to find a place to go, took off. At the time, oil prices (WTI) ranged from $75 to $113 a barrel. But in July 2014, oil prices began to dive, and in 2015, the oil bust hit production.

…click on the above link to read the rest of the article…

Swan Song Of The Central Bankers, Part 5: The Flat Line Does Not Spell Recovery

February 18, 2018

Swan Song Of The Central Bankers, Part 5: The Flat Line Does Not Spell Recovery

The punk January industrial production (IP) report brought another reminder that the Fed has stimulated nothing at all on the output/employment prong of its dual mandate.

Indeed, as they celebrate a purported “mission accomplished” full employment recovery and confidently prepare to plow forward with an epochal pivot to QT (quantitative tightening), our Keynesian central bankers have remained absolutely mum on this stunning fact: To wit, there has been no recovery at all in US industrial production, and that’s as in nichts, nada and nugatory.

In fact, January 2018 output in the manufacturing sector was still 2.2% below its December 2007 level, and total industrial production has barely crept forward at a 0.19% annual rate. And if you don’t think that is close enough to zero for government work, just recall what a real historical recovery looks like on the IP front.

During the December 2000 to December 2007 cycle, for example, total IP grew at 1.4% per annum and manufacturing output rose by 1.9% per annum on a peak-to-peak basis. Prior to that during the 1990-2000 cycle, the figures were 4.0% and 4.6% per annum, respectively.

And if you want to dial way back in time to the Reagan-Bush cycle from July 1981 to July 1990, the peak-to-peak growth trend for total industrial production was 2.3% per annum and 2.8% for manufacturing output. And, by your way, that cycle also included a deep recession in 1982 that was only slightly less severe than the 2008-2009 downturn.

In short, when you don’t get anywhere on industrial production over the course of 10 full years—-the Great Recession notwithstanding—you are not succeeding. And while you are bragging, you at least ought to attempt to explain or rationalize what is otherwise a screaming aberration in the modern history of business cycles.

…click on the above link to read the rest of the article…

Here is what’s holding back China’s plans for world domination

January 7, 2018

Here is what’s holding back China’s plans for world domination

Australia may be the worlds largest exporter of coal, sending out 388 million tons in 2015, but China’s production of coal the same year was 3,747 million tons — nearly ten times as much, and nearly half of global coal production. But the Chinese coal boom is turning. David Archibald describes the geopolitical ramifications. For me, the next question is what stops China doing nukes? — Jo

PS: There is a rumor that Australia has only 4-5 days of fuel stocks today, and is especially low on aviation fuel. Anyone with info, please comment or email joanne AT this site.

________________________________________________________

Here is what’s holding back China’s plans for world domination

One of the reasons that China produces the world’s cheapest solar panels, for example, is because it has some of the world’s cheapest coal-fired power

There is no doubt that China wants to subjugate Asia, echoing Japan’s role during World War II. For those who think China’s economy might overtake the United States economy, and thus make China a more formidable adversary, this article aims to provide detail on China’s main constraint in that ambition: that its domestic coal production is near its peak and will then go into long-term decline.

Even if China can keep its energy supply constant with an accelerated expansion of its nuclear power sector, the cost of producing coal from deeper mines will mean that the costs of industrial production will rise due to higher feedstock costs. One of the reasons that China produces the world’s cheapest solar panels, for example, is because it has some of the world’s cheapest coal-fired power. German solar panel-producers are hobbled by that country’s energiewende, which, translated from the German, means the miracle required to replace coal and nuclear power with sunbeams and breezes and still have a functioning economy.

…click on the above link to read the rest of the article…

Without Recovery There Is Every Need To Examine The Worst Case

May 18, 2016

Without Recovery There Is Every Need To Examine The Worst Case

There is a great deal that is wrong with mainstream economic commentary, starting with its unwavering devotion to orthodox economics and unshakable faith in their “stimulus.” No matter how little is actually stimulated there is never any doubt that the media will simultaneously forget the last one while lavishing praise on the next one. It is, however, the actual economic commentary itself that may be the most damaging. Because nothing works, every news story is printed from the shallowest, narrowest perspective. It is a grave disservice to the public and journalism.

As an example, on July 15, 2015, the Wall Street Journal published an article on Industrial Production that wasn’t unique or atypical. If you read these kinds of stories you find them utterly devoid of differences, so this effort was entirely symptomatic. At the time, industrial production for June 2015 was estimated to have risen 0.3% month-over-month, ending a string of six consecutive M/M declines. That fact more than the degree of the rise was cheerfully reported as if meaningful.

U.S. industrial production rose in June, a sign that the improving economy is helping the sector break out of a slump.

Industrial production, a measure of output in the manufacturing, utilities and mining sectors, rose a seasonally adjusted 0.3% from May, the Federal Reserve said Wednesday.

Even though the article noted that one month was nowhere near enough to overcome those prior declines, it didn’t matter because it was finally a plus sign conforming to the mainstream “narrative.”

The pickup comes as other measures show improvement in the economy this spring, with employment continuing to climb and wages creeping up as the labor market tightens…

“Weakness in manufacturing appears to be past its peak,” wrote Jim O’Sullivan, chief U.S. economist for High Frequency Economics in a note to clients.

…click on the above link to read the rest of the article…

The Last 16 Times This Happened There Was A Recession…

January 20, 2016

The Last 16 Times This Happened There Was A Recession…

Something has just happened that has signaled a recession every single time that it has occurred since World War I. 16 times since 1919 there have been at least 8 month-over-month declines in industrial production during the preceding 12 month period, and in each of those 16 instances the U.S. economy has plunged into recession. Now that it has happened again, will the U.S. economy beat the odds and avoid a major economic downturn? I certainly wouldn’t count on it. As I have written about repeatedly, there are a whole host of other numbers that are screaming that a new recession is here, and global financial markets are crumbling. It would take a miracle of epic proportions to pull us out of this tailspin, and yet there are many people out there that are absolutely convinced that it will happen.

John Hussman is not one of them. In his most recent weekly comment, he examined this stunning correlation between month-over-month declines in industrial production and recessions. To me, what Hussman has presented is overwhelmingly conclusive…

Last week, following a long period of poor internals and weakening order surplus, we observed fresh declines in industrial production and retail sales. Industrial production has now also declined on a year-over-year basis. The weakness we presently observe is strongly associated with recession. The chart below (h/t Jeff Wilson) plots the cumulative number of month-over-month declines in Industrial Production during the preceding 12-month period, in data since 1919. Recessions are shaded. The current total of 10 (of a possible 12) month-over-month declines in Industrial Production has never been observed except in the context of a U.S. recession. Historically, as Dick Van Patten would say, eight is enough.

After looking at that chart, is there anyone out there that still doubts that the U.S. economy is in significant trouble?

…click on the above link to read the rest of the article…

This is Where Industrial Production Normally Meets a Recession

January 16, 2016

This is Where Industrial Production Normally Meets a Recession

The only exceptions were in the early 1950s

Painful – that’s how you can describe the slew of recent US economic data. And today’s data dump was even worse.

On a regional level, there was the Empire State Manufacturing Survey. The Current Activity Index plunged to the lowest level since March 2009. The last time it had squeaked into positive territory was in July 2015. The Expectations Index plummeted by an unprecedented 29 points, also to the worst level since March 2009.

Thank God it’s only regional. But wait…. California’s Inland Empire Purchasing Managers Index, which tracks manufacturing in the Inland Empire, started losing its grip in August and in December plunged to the lowest level since the dark days of February 2009.

The report pointed to the link between the index and the overall economy in the region: Historically, when the PMI drops below a certain level, as it did in December, and stays there for three months, it coincides with a recession in the region’s overall economy [“The Sky is Falling” on California Manufacturing, Worst since February 2009, Might Kick Regional Economy into Recession].

Then retail sales for December dropped. Turns out, holiday sales brought no respite to the beleaguered brick-and-mortar retailers [read… Wal-Mart Rubs Salt on Deepening Retail Wounds].

And the final shoe to drop today, in a gratuitous sort of way, was the Federal Reserve’s index for industrial production. It fell 0.4% in December, after having already fallen 0.9% in November and 0.2% in September, while August had been flat. Year-over-year, December was down 1.8%.

A year-over-year drop of this magnitude (-1% or more) has been linked to a recession every time it occurred over the past six decades. You have to dig into the early 1950s before you find the last two occurrences where this kind of drop in industrial production was not associated with a recession.

…click on the above link to read the rest of the article…

Chinese Economic Outlook “Skewed Heavily To The Downside,” BNP Says

April 21, 2015

Chinese Economic Outlook “Skewed Heavily To The Downside,” BNP Says

Over the past several months we’ve built on several narratives out of China certainly not the least of which is the idea that economic growth in the country is decelerating quickly at a time when accelerating capital outflows make devaluation an unpalatable (if inevitable) proposition. Signs of a dramatic slowdown were on full display earlier this month when GDP growth slipped to 7%, the slowest pace in six years, while key indicators such as rail freight volume have fallen completely off a cliff:

With the country’s tough transition to a service-based economy being made all the more difficult by the hit industrial production will likely take as Beijing ramps up efforts to fight a pollution problem that was thrust back into the spotlight early last month thanks to a viral documentary, it’s reasonable to suspect we’ll be seeing a lot more of the idle cranes, empty construction sites, and half-finished abandoned buildings that greeted Bloomberg metals analyst Kenneth Hoffman who returned from a tour of the country earlier this month. Ultimately, Hoffman’s assessment was that metals demand in China is collapsing and isn’t likely to pick back up for the foreseeable future.

This is bad news for the Chinese economic machine and it’s also bad news for any iron ore miner out there whose marginal costs aren’t low enough to stay profitable in the face of a protracted downturn in prices because if you can’t convince the big guys that your price collusion idea will pass regulatory muster, well, they’ll likely take the opportunity to keep right on producing despite the slump and run you out of business.

…click on the above link to read the rest of the article…

China’s Vicious Growth Circle by Keyu Jin – Project Syndicate

October 19, 2014

China’s Vicious Growth Circle by Keyu Jin – Project Syndicate.

LONDON – Most economists have a reason to be worried about China’s economy – whether it be low consumption and large external surpluses, industrial overcapacity, environmental degradation, or government interventions like capital controls or financial repression. What many fail to recognize is that these are merely the symptoms of a single underlying problem: China’s skewed growth model.

That model is, to some extent, a policy-induced construct, the result of a deep-rooted bias toward construction and manufacturing as the leading drivers of economic development. This predilection harkens back to the Great Leap Forward of the 1950s, when scrap metal was melted to meet wildly optimistic steel-production targets, thereby advancing Mao’s dream of rapid industrialization.

Today, China’s proclivity for industrial production is manifested in large-scale manufacturing and infrastructure projects, encouraged by direct and indirect government subsidies. By boosting investment and generating tax revenue for local governments, this approach has a more immediate positive impact on GDP than efforts to develop the service sector.

…click on the link above to read the rest of the article…

Tag Archives: industrial production

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Latest Posts