Report Detail Summary

October 16, 2018

The Industrial Production Index rose 0.3% in September, about the same rate of change as in the previous two months. For the third quarter, in spite of the negative effects of Hurricane Florence, total industrial production advanced at an annual rate of 3.3%, marking its fourth consecutive quarterly increase. At 108.5% of its 2012 average, the Industrial Production Index has risen 5.1% over its previous September level. The capacity utilization remained unchanged at 78.1%. The figure suggests that there is ample room for a sustained expansion. For the industrial sector, capacity utilization is 1.7% percentage points below its long run (1972-2017) average. If, as we believe, that regulations and tax rates drive a wedge between demand and supply which affects overall capacity utilization, it follows that a policy of lower tax rates and regulations results in an increase in capacity utilization. On the other hand, increased regulations, tax rates and trade restrictions will not foster a higher capacity utilization.

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