Goldman's Take On Industrial Production: Volatility Blamed On Abnormal February Heat

Tyler Durden's picture

From Goldman: "US industrial production increased by 0.8% mom in March, up from a revised 0.1% increase previously. In February, unseasonably warm temperature reduced heating demand and therefore output of utilities. This held back the gain in overall production despite growth elsewhere. This effect reversed in March, leading to strong growth in the index." So between snow, rain, heat, earthquakes, nuclear explosions, oil spills, all of which are of course completely unforeseeable, why do we need economists making "forecasts" again?

From Jan Haztius, who is desperately seeking the best way to break the news about the GDP growth cut.

MAIN POINTS:

1. US industrial production increased by 0.8% mom in March, up from a revised 0.1% increase previously. In February, unseasonably warm temperature reduced heating demand and therefore output of utilities. This held back the gain in overall production despite growth elsewhere. This effect reversed in March, leading to strong growth in the index.

2. Beyond this temporary noise, industrial activity remained quite strong. Output of manufactured products increased by 0.7% mom in March, reflecting gains in both motor vehicle output and other items. Over the last four months, the industrial production index for manufactured products increased by an annualized rate of 9.9% - the fastest four-month pace of increase since the recovery began. In coming months, we will be watching closely for the effect of any supply-chain disruptions resulting from the natural disasters in Japan. But heading into this potential shock, momentum in the sector looks strong.

3. The capacity utilization rate increased to 77.4% in March from 76.9% in February. The level was in line with consensus expectations - despite higher production growth overall - due to revisions to earlier months.

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Misean's picture

Oh man, well at least summer is on its way so we should have estimates with expectations of cool to moderate weather with no chance of hurricanes, tornados and thunderstorms to keep the data clean.

Ray1968's picture

Higher or lower than average temps = changes in energy usage

Rain keeps the shoppers at home

Snow is just white-death from the sky

Wind blows the credit card right out of your hand

A perfect sunny day will keep all potential credit card shoppers in the park or mowing the grass.

Its all a good excuses.

BobPaulson's picture

The wind also scatters the money dropped from helicopters far from the target location. Bad for retail.

Why not drop iPads from helicopters? They're heavier and won't blow away compared to those 1 billion Mark bills.

BobPaulson's picture

Double post - my ipad is obviously not fast enough. Probably the weather affecting internet bandwidth.

SheepDog-One's picture

I see, brutal winter storms were what was to blame for high unemployment data, but 'warm winter' now blamed for lagging production.

'Make shit up as we go' economic model.

depression's picture

100% chance of weather, makes one hell of a foolproof econometric safety net.

 

Ray1968's picture

Nice pattern of blaming the weather. That should be good strategy forever... since we'll always have weather!

Long-John-Silver's picture

So it's all the Warmers fault once again? Did they call Al Gore in for consultation on this?

Sudden Debt's picture

he's in his jet on a direct flight to new york to talk about it.

 

I guess they didn't bother paying him a million to "consult" him...

 

 

 

Rodent Freikorps's picture

"Neither snow nor rain nor heat nor gloom of night stays these propagandists from the swift completion of their appointed spin"

scratch_and_sniff's picture

Its true, people get the horn when the sun shines. Everyone’s banging each other; look at the correlation between weather patterns and condom purchases.

SheepDog-One's picture

Oh, well I thought very cold bad winters were the cause of that. HEY whatever works! 'Weather economic model'....I guess this early summer we'll get some rain showers to blame on whatever goes wrong with the world economy.

Arttrader's picture

Absolutely - long Trojans - Church & Dwight (CHD).  Get your mind out of the gutter.  A long position.  This isn't getting better.  I give up.

Arttrader's picture

Absolutely - long Trojans - Church & Dwight (CHD).  Get your mind out of the gutter.  A long position.  This isn't getting better.  I give up.

Sudden Debt's picture

I was almost sure they would bring up the ration part...

we'll just have to wait until every ordinary flies all turns into fireflies and common rain strips the paint of our cars...

 

 

Sofa King's picture

What the hell are they talking about? Winter was a motherfucker this year.

SheepDog-One's picture

220, 221, whatever it takes!

SheepDog-One's picture

Wow that is crazy, so everyone is maxing out their credit cards and cutting up the bills when they come. This will end well.

falak pema's picture

non condomed fukushima fukks? flying fish and uncondoned, remorseless fishy games. Blame it on the weather that we wear no skin protection.

Oh regional Indian's picture

Weathering the downturn takes on a hole new meaning here eh?

Hey, we weathered the last set of bad NUMBers. Let's weather this one too.

ORI

http://aadivaahan.wordpress.com/2011/04/15/the-death-of-empathy/

Cognitive Dissonance's picture

Now that's odd because weren't we discussing just a few months ago how all the Wall Street whore houses were using the winter snow as an excuse for poor numbers?

Careless Whisper's picture

From Jan Haztius,

again? another GoldmanSachs post? this should earn TD some flashdance bucks.

http://www.flashdancersnyc.com/

 

Bubbles the cat's picture
Bubbles the cat (not verified) Apr 15, 2011 10:12 AM

The insidious effect of temperature on human cognitive ability has been overlooked for too long:

http://www.suite101.com/content/temperature-and-learning-a3319

Memo to GS: Get the air con fixed.

writingsonthewall's picture

Good thing the weather was always 'fine and temperate' during boom times wasn't it?

 

I read an interesting article talking about how EMP from the Sun's over-activity at the moment can have dramatic effects on the weather - there's your problem folks.

 

I say we launch everything we have at that Sun - it's trying to destroy us - send in the nukes, tommohawks, tin cans, kettles, bricks, stones - everything we have got Jim - we need to take that sucker down!

 

They say that Nicolae Ceausescu's regime failed...not when uprisings happened, not when the people fought back...but during a speech when in a pause in his address someone could be heard laughing...the dictator had become a joke...it was all over.

 

I see this weather blaming as the same pattern - the more ridiculous the excuses the weaker the regime becomes. Stand up comedians are being handed material on a plate by the foolhardy excuses of the economists, the rest of us wouldn't be able to spot a serious forecast if it slapped us in the face anymore. Credibility and confidence has been destroyed...and soon the sheepeople will realise they have been abandoned by their leaders and they will do what sheepeople do best....they will panic in herds.

Bubbles the cat's picture
Bubbles the cat (not verified) writingsonthewall Apr 15, 2011 2:15 PM

OK. First Gaddafi then the sun.

Byte Me's picture

Global warming naysayers recant now.

Bullish on theocrats obviously -- GS told me the 'truth' obviously.

(Next up - a theocracy driven double ETF - if you believe this BS from the squid's mouth.)

writingsonthewall's picture

...and the 'Goldman pause' is truly over.

 

Brent up 1.2% on the day - seems someone in the US just went awfully long soon after the markets opened. I wonder who that was....

 

GS clients must have 'SUCKER' emblazoned across their foreheads.