The U.S. Industrial production report undershot estimates
The U.S. Industrial production report undershot estimates with a 0.1% March drop after small net downward revisions, with the Q1 disappointment spread between the manufacturing and mining sectors. Analysts saw a small upside surprise for utilities. The flat manufacturing output figure matched hours-worked from the jobs report, with a hit from a -4.1% vehicle assembly rate swing to a 10.8 M rate after prior upward revisions. Mining revealed a -0.8% March figure that undershot a 0.3% hours-worked rise. The factory sector will likely bounce in Q2 given the stabilization in producer sentiment at still-firm levels, and a firm path for mining despite the Q1 setback that followed the Q4 oil price plunge. Analysts saw winter disruptions from harsh weather, a government shutdown, fires, hurricanes, and an equity market meltdown that raised uncertainty, but all of these disruptive impacts have reversed direction now. Analysts expect a 3.0% growth rate for industrial production in Q2 after rates of -0.3% in Q1, 4.0% (was 3.7%) in Q4, and 5.2% in Q3. The factory sector is still outperforming GDP, with estimated 2019 gains of 2.9% for industrial production and 2.6% for GDP, following respective gains of 3.9% and 2.9% in 2018, 2.3% and 2.2% in 2017, -2.0% and 1.6% in 2016, and -1.0% and 2.9% in 2015.