Tags: industrial | production | housing | scream

The Fundamentals of the Economy Are Getting Stronger by the Day

Tuesday, 16 Oct 2012 12:00 PM

INDICATOR: September Industrial Production/Home Builders’ Confidence

KEY DATA: Industrial Production: Up 0.4 percent; Manufacturing: Up 0.2 percent/NAHB Index: 41 (Up 1 point)

IN A NUTSHELL: “The slowdown in the manufacturing sector is ending and if vehicle sales stay strong, production should rise faster going forward.”

WHAT IT MEANS: The softening in the manufacturing sector had been a major concern, but that might have been just temporary.

Industrial output rose solidly in September, as manufacturing began to pick up the pace again. While the rise was nothing spectacular, the only industry where output was cut back sharply was motor vehicles.

Alert: End of America's Middle Class a Startling Reality. Read More Here.

However, the jump in sales in September should lead to a firming in assembly rates going forward. Meanwhile, production in the business equipment, electronics, construction and business supplies sectors, as well as the defense and space sectors, was up solidly.

There was even an increase in clothing output, which is always a nice surprise the few times it happens.

While computer output improved, communications equipment was down. All those iPhone5s are made somewhere else.

Separately, the National Association of Homebuilders/Wells Fargo Housing Market Index edged up again. While demand is rising, the credit markets are not being very helpful, and that is slowing the improvement in this sector.

As I have said hundreds of time, this recovery is different, and the continued restrictions in credit are keeping the key housing sector from reaching full recovery.

MARKETS AND FED POLICY IMPLICATIONS: The summer slowdown looks to be behind us. Consumers are spending, manufacturers are producing and housing is in recovery.

Someone should clue the business community into this reality, as CEOs continue to act as if the sky has already fallen. Okay, I am being much too harsh. It is easy to be cautious now, and if the fiscal cliff isn’t reached, act strongly early next year.

Alert: End of America's Middle Class a Startling Reality. Read More Here.

That said, the fundamentals of the economy are getting stronger by the day, and the only problem is a lack of willingness to hire. The reports on industrial production and housing add to my growing belief that the first half of next year could be really strong if an agreement on taxes and spending is reached.

Since there is nothing that will happen before mid-December at the earliest, I will have plenty of time to scream at the politicians for being the highest of the hurdles facing the economy. And scream I will.

© 2015 Newsmax Finance. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved