- US industrial production +0.9% versus 0.4% estimate
- prior month revised to 0.9% from 0.5%
- US capacity utilization 78.3% versus 77.8% estimate
- last month revised to 77.7% from 77.6%
- manufacturing output for March increased 0.9% versus 0.6% estimate. Last month saw an increase of 1.2%
- industrial production year on year rose 5.47% versus 7.5% last month
Other highlights from the Fed on the state of the manufacturing sector:
- Total industrial production advanced 8.1 percent for the first quarter.
- The output of motor vehicles and parts jumped 7.8 percent,
- motor vehicle production contributed to increases of 3.9 percent
- consumer durables and transit equipment increased 5.2 percent
- Excluding the large gain in motor vehicles and parts, the output of durable goods increased 0.4 percent in March, with most industries posting gains; only nonmetallic mineral products, primary metals, and furniture and related products recorded decreases
- The index for utilities increased 0.4 percent,
- The index for mining advanced 1.7 percent.
- At 104.6 percent of its 2017 average, total industrial production in March was 5.5 percent above its year-earlier level.
- Capacity utilization climbed to 78.3 percent, a rate that is 1.2 percentage points below its long-run (1972–2021) average.
Although, the capacity utilization is still below it’s long run average by 1.2% (from 1972), it still is at its highest level since January 2019. The 2018 cycle high reached 79.9%.
As the, economy continues to chug along and shortages in autos and building materials continue as industries recover from the pandemic, supply chain issues, and employment remains tight, that can in turn lead to more inflation and inflation
Inflation
Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Read this Term expectations before reaching higher capacity limits. If workers are needed to source higher levels of capacity, that could be a problem.
The good news is manufacturing advancements can require less workers as automation advancements can increase capacity without the need for added manpower.