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August Industrial Production Crashes Most Since May 2009 – Harvey Scapegoated

Amid a collapse in US auto sales (and slumping retail sales), August Industrial Production collapsed 0.9% MoM. This is the biggest monthly drop since May 2009!

Industrial production declined 0.9 percent in August following six consecutive monthly gains.


Annual IP growth also staggered to 6 month lows..

Hurricane Harvey, which hit the Gulf Coast of Texas in late August, is estimated to have reduced the rate of change in total output by roughly 3/4 percentage point. The index for manufacturing decreased 0.3 percent; storm-related effects appear to have reduced the rate of change in factory output in August about 3/4 percentage point.

Industries with the largest storm-related effects were petroleum refining, organic chemicals, and plastics materials and resins…

Just wait for the v-shaped recovery from this (or not).

And finally, while Industrial Production remains 1% below its Nov 2014 highs (and unchanged from its Nov 2007 highs), The Dow Jones Industrials Average is up 30% from the Nov 2014 levels (and 57% from 2007 highs)…


So to sum up – IP collapsed in August, officials want to blame Hurrican Harvey (which makes sense), but even excluding Harvey's effects, IP would have dropped 0.15% – missing expectations of a 0.1% gain by 0.25 percentage points (i.e. it's not just Harvey!)

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