Importance
Industrial production and capacity utilization indicate not only trends in the manufacturing sector, but also whether resource utilization is strained enough to forebode inflation.

Interpretation
The bond market will rally with slower production and a lower utilization rate. Bond prices will fall when production is robust and the capacity utilization rate suggests supply bottlenecks. Healthy production growth is bullish for the stock market only if it isn't accompanied by indications of inflationary pressures.

The production of services may have gained prominence in the United States, but the production of manufactured goods remains a key to the economic business cycle. A nation's strength is judged by its ability to produce domestically those goods demanded by its residents as well as by importers. Many services are necessities of daily life and would be purchased whether economic conditions were weak or strong. Consumer durable goods and capital equipment are more likely purchased when the economy is robust. Production of manufactured goods causes volatility in the economy. If demand for manufactured goods decreased, it would lead to less production with declines in employment and income.

The three most significant sectors include motor vehicles and parts, aircraft and information technology. Volatility in any these single sectors could affect the total.

Industrial production is subject to some monthly variation. As with all economic statistics, the three-month moving average of the monthly changes or year over year percent changes provide a clearer picture of the trend in this series.

Frequency
Monthly.

Source
Board of Governors, Federal Reserve System.

Availability
Around mid-month.

Coverarge
Data are for the previous month. (Data for June are released in July.)

Revisions
Monthly, data for the prior three months are revised to reflect more complete information. Annually, new seasonal adjustment factors are introduced in December. This revision affects at least three years of data. The magnitude of the revision is moderate.