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The industrial production is a measure of the change in the production of the nation's factories, mines and utilities. Also includes a measure of their industrial capacity and how much of it is being used (commonly known as capacity utilization).
Why is it useful?
The index of industrial production shows how much factories, mines and utilities are producing accounting for a slight percent of the GDP but is a representation of the levels of expansion in the economy, for it can be a comparative measure to weigh which is growing on a higher pace whether is capital goods or consumption assets. As it accounts for the heavy part of production in the economy, therefore it is watched regularly by various parties in hopes of determining how correlated industries in the economy will likely be performing in that given period in order to act accordingly. In addition to the preview to the production levels provide the capacity utilization levels provide a very clear indicator to inflation levels and threats that is why it is important for markets to notice for any future monetary policy action that might take place.
As this indicator is the measure of how strong, steady, and fast is the pace of growth growing, then a stronger higher reading is positively coherent with the currency as well as the stocks for the enhancement of corporate income, where the opposite is applicable in both scenarios as well. Worth mentioning a higher reading in the capacity utilization indicates that corporations are using their assets to the fullest as that provides a positive reflection on the stocks, for the level of productivity is improved when exploiting all available assets in that process and in its turn provides increased returns for the corporations.
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