... but with fits and starts.
This morning the Federal Reserve reported that:
Industrial production increased 0.8 percent in November after having been unchanged in October.
Manufacturing production advanced 1.1 percent, with broad-based gains among both durables and nondurables.... At 99.4 percent of its 2002 average, total industrial production was 5.1 percent below its level of a year earlier. Capacity utilization for total industry moved up 0.7 percentage point to 71.3 percent, a rate 9.6 percentage points below its average for the period from 1972 through 2008.
These reports were in line with estimates. Since bottoming in June, Industrial Production is up 3.6% 3.8% for an annual rate of 8.7% 9.1%. This is the best rate of expansion off a recession bottom since 1982, and far exceeds the 1992 and 2002 "jobless recoveries."
The expansion of 8.7% at an annual rate is much better than the last two weak recoveries, and is nearly as strong as the 1982 V-shaped economic recovery, as indicated in this graph (which does not include this morning's data):
Industrial production and capacity utilization are not the only items producing a "V" shaped industrial recovery. Average hours in manufacturing are up more strongly from the bottom than at any time since 1982:
as are hours of overtime in industry:
The fact that both hours of production and overtime are increasing at a V-shaped trajectory bodes well for job growth in manufacturing soon, because once hours are increased, and temporary workers added (which has also happened in the last few months), the next step is to hire new workers.
In large part, the V-shaped industrial recovery so far can be laid at the feet of the auto industry, which has increased sales by almost 2 million at an annual rate (from just over 9 million to just under 11 million), although this is only about 1/3 of the way back to the pre-recession level of vehicles sold:
Since early September, I have taken Prof. Krugman's idea to heart that while me may be out of "hell", we are only in "purgatory" till jobs are added to the economy. In that regard, Industrial Production is one of 4 data series I am tracking in an effort to forecast when job growth will occur. Today's Industrial Production data is actually for November, in which the household jobs survey did show growth, but the payrolls survey was just barely negative at -11,000 (subject to revisions). [NOTE: The household survey typically turns positive either the same month as, or 1 or 2 months prior to, the payrolls survey].
In summary, this morning's Industrial Production report bodes well for either a positive November revision into actual job growth, or else for December or January marking the turn.
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And now, the "fits and starts" part: If Industrial Production and Capacity Utilization came in showing robust growth, then this morning's Empire State survey showing the barest of growth in the NYC area, is a big disappointment:
The Empire State Manufacturing Survey indicates that conditions for New York manufacturers leveled off in December, following four months of improvement. The general business conditions index fell 21 points, to 2.6. The indexes for new orders and shipments posted somewhat more moderate declines but also moved close to zero. Input prices picked up a bit, as the prices paid index rebounded to roughly its November level; however, the prices received index moved further into negative territory, suggesting that price increases are not being passed along. Current employment indexes slipped back into negative territory. Future indexes remained well above zero but signaled somewhat less widespread optimism than in recent months. Indexes for expected prices paid and received declined moderately but remained well above zero.
That employment contracted is the biggest disappointment. On the other hand, these regional surveys are notoriously noisy, and we have had both upside and downside surprises from various regions in the last few months.
Some time ago, Bonddad described the likely course of this economic expansion as a "fits and starts" recovery, and that description seems very apt this morning. And of course, until wages improve, and until jobs turn around, and turn around enough to lower the unemployment rate, most Americans will appropriately view the economy as not yet moving in the right direction. Nevertheless, 5 months after the turn, so far what we are seeing in manufacturing is very much a V-shaped recovery.