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Industrial production picks up

August Industrial Production rose more than expected (0.2% vs. 0%), and the July increase was revised upward by 0.5%, thus ending the slump that had persisted throughout the first half of the year. As the second chart shows, Europe's may still be in a slump, but at this point that is hardly news. Manufacturing production (top chart) also pulled out of its slump, and is up at a 3.8% annualized rate over the past six months. This is most definitely not the sort of thing you would expect to see if the economy were rolling over as so many seem to believe. Growth may not be as strong as it should be, but the economy is still growing. Continued growth, even at a relatively slow pace, puts the economy on a much better footing than the markets are giving it credit for. Pessimism is pervasive, but so far unwarranted.

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