Fundamental Analysis

With Broad Support, Production Jumps Most in Three Years

Typography

Despite mixed signals from survey data, the latest report on the industrial sector suggest broad firming in manufacturing activity as industrial production increased 1.0 percent—the largest gain in three years.

Industrial Production Firms

The 1.0 percent increase in industrial production for April was more than double the 0.4 percent increase that had been expected and affirms that the slow-growth recovery in the manufacturing sector remains intact.

Encouragingly, manufacturing output also increased 1.0 percent in April and with that gain the overall level of manufacturing output is at a fresh high for this cycle.

Broad-Based Growth

For the first time in recent memory, all three major industry groups were higher with manufacturing, mining and utilities all posting gains of at least 0.7 percent on the month.

One lesson from the ups and downs of the manufacturing recovery in this cycle is to curb your enthusiasm when the data finally indicate firming in activity. The latest print of the ISM manufacturing survey showed a big dip in the orders component.

About the Contributor
Wells Fargo Securities
Author: Wells Fargo SecuritiesWebsite: http://www.wellsfargo.com/
Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A, Wells Fargo Advisors, LLC, and Wells Fargo Securities International Limited. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2010 Wells Fargo Securities, LLC.
More from the contributor