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Weather Blamed For Industrial Production Miss

Industrial production is the latest economic miss, expected to rise from a previously unchanged print, to 0.3%, instead posting another flat print. The reason: blame it on the weather. From the Fed: "Industrial production was unchanged in March for a second month but rose at an annual rate of 5.4 percent in the first quarter of 2012. Manufacturing output declined 0.2 percent in March but jumped 10.4 percent at an annual rate in the first quarter. The gain in manufacturing output in the first quarter was broadly based: Even excluding motor vehicles and parts, which jumped at an annual rate of nearly 40 percent, manufacturing output moved up at an annual rate of 8.3 percent and output for all but a few major industries increased 5 percent or more. In March, production at mines rose 0.2 percent and the output of utilities gained 1.5 percent. For the quarter, however, the output of utilities dropped at an annual rate of 13.8 percent, largely as a result of unseasonably warm temperatures over the past several months, while the output of mining fell 5.4 percent. At 96.6 percent of its 2007 average, total industrial production for March was 3.8 percent above its year-earlier level. The rate of capacity utilization for total industry edged down to 78.6 percent, a rate 2.1 percentage points above its level from a year earlier but 1.7 percentage points below its long-run (1972--2011) average." In other words, blaming both cold and hot weather is now a solid excuse for anything that does not go according to the best laid plans of central bankers. Got it.

As the chart below shows, another record hot April, and IP is about to go negative all over again.

And here is an upcoming convergence trade that one can take to the bank:

Chart: Bloomberg and Reuters