Summary

• Industrial Production (IP) rose for its fourth consecutive month after March and April’s sharp contraction (Chart 1)
• IP remains 7.6 percent below its December 2019 level (Chart 1)
• Durable Manufacturing output was up 0.7 percent in August, led by Computers and Aerospace products (Chart 2)
• Computer & Electronic Products (CEP) continue to significantly outperform all other sectors in industrial manufacturing with production up 5.5 percent y/y and 2.3 percent even during the Great Lockdown (Chart 2 & 3)
• Semiconductor output grew 6.7 percent y/y in August compared to 1.8 percent for the same period in 2019 (Chart 2 & 4)
• Output growth slowed significantly in August compared to June and July, which is consistent with our view the global economic rebound has plateaued and is in a holding pattern due to concerns over a second wave of the pandemic and political uncertainty (Chart 3 & 4)
• It is unclear how much of the outperformance of CEP was carry forward one-off COVID purchases and precautionary supply chain stocking

Interesting data on which industrial sectors are winning during the Great Lockdown.  The data are from last week’s Industrial Production release from the Federal Reserve Board.

Clearly, there has been a strong bounce from the March and April collapse, which has slowed markedly last month, and thus rules out a V-shaped recovery.  The next 5-10 percent to get back to even will be much harder.

Chart 1

Chart 2

Chart 3

Chart 4

Source: Custer Consulting Group