Market Overview

Update: Industrial Production Increases In September

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The Federal Reserve reported that U.S. Industrial Production for the month of September was reported at +1.0%, which was above the consensus expectations for +0.4% and well above last month's downwardly revised reading of -0.2% (July: +0.2%, June: +0.4%, May: +0.5, April: 0.0%, Mar: +0.9%, Feb: +1.2%).

The nation's factories reported that Capacity Utilization came in at 79.3%, which was also above the expectations for a reading of 79.0% and above last month's downwardly revised reading of 78.7% (July: 79.1%, June: 79.1%, May: 79.1, April: 78.6%, Mar: 79.3%, Feb: 78.8%). The current

Note that Capacity Utilization remains slightly below its long-run (1972-2013) average of 80.1. This indicates there is still some production slack in the economy.

Why should you care about this data? Wage inflation is an important component of the Consumer Price Index. And history shows that inflation has been one of the leading causes of death to bull markets in stocks. Therefore, we watch the level of capacity utilization for signs of tightness in the labor markets.

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