Industrial Production (Dec) Actual -2.0%, Expected -0.9%, Previous -1.3% (Revised from 0.6%)
Capacity Utilization (Dec) Actual 73.6%, Expected 74.6%, Previous 75.2% (Revised from 75.4%)
Release Explanation: The total value of the output from mines, industrial factories and utilities is in the Industrial read. The value of manufactured goods is in the Manufacturing read. The Shipment number covers the amount sent abroad. Capacity Utilization cover at what rate Factories are running at compared to the maximum. High production numbers usually denote an economy in an upwards trend, or growth period. These reports are reactive to change and are well respected. GDP will normally be directly affected by the Industrial Production component. Durable Goods and Retail Sales will normally be affected by the Manufacturing aspect of the report. A currency will eventually be affected by these numbers, but only once they filter through to the main releases.
Trade Desk Thoughts: The worsening global slowdown forced U.S. companies to cut back further on production in December. Industrial production fell 2.0% last month, twice the amount forecasted by economists. Auto output fell to the lowest in more than 25 years. Capacity utilization fell to 73.6%, the lowest level since 1983.
Producers are cutting back as demand and prices nosedive, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. Expect to see further reduction in put-put at least through the first half of the year.
Last month's plant use rate was 7.4 percentage points below the average level for 1972 to 2007, the Fed said. Regional reports from the New York and Philadelphia regions released yesterday showed manufacturing continued to deteriorate at the start of the new year.
The decline in motor vehicle and parts production in December followed a 2.5 percent drop a month earlier, the report said. Automakers assembled cars and light trucks at an annual rate of 6.43 million during the month, the lowest since November 1982. Production of consumer durable goods, including autos, furniture and electronics, fell 4.7%. Utility production decreased 0.1% after rising 1% a month earlier. Mining output, which includes oil drilling, dropped 1.6% after a 2.2% increase.
Forex Technical Reaction: Stocks were recently declining a bit but may have just found some support. USD/JPY looks to have found support on 90.36