US industrial production up 4th month in row: Fed

Washington, May 17 (Agency) US industrial production grew for a fourth month in a row in April, demonstrating resilience in the underlying engine of the economy despite inflation at 40-year highs, data from the Federal Reserve showed Tuesday. “In April, total industrial production increased 1.1 per cent—the fourth consecutive month of gains of 0.8 per cent or greater,” the central bank said in a statement as it published the so-called Industrial Production Index. The IPI measures levels of production and capacity in the manufacturing, mining, electric, and gas industries, relative to a base year. The Federal Reserve publishes the data in the middle of every month, and revisions to previous estimates at the end of the month. Earlier in the day, the Commerce Department announced that US retail sales grew by 0.9% in April, almost double the growth from a month earlier and just below economists’ expectations as Americans appeared to be getting accustomed to prices growing at their fastest pace in four decades. Economists had estimated a modest growth of just 0.5% for the IPI in April.

For retail sales, the official number almost matched forecasts of a 1% growth. The data reinforces the central bank’s assertion in recent weeks that the string of interest rate hikes it has planned for subduing inflation will not send the economy into a recession. After contracting 3.5% in 2020 from disruptions forced by the coronavirus pandemic, the US economy expanded by 5.7% in 2021, growing at its fastest pace since 1982. But inflation has grown just as fast as the economy, or maybe a tad quicker. The Personal Consumption Expenditure Index, an inflation indicator closely followed by the Federal Reserve, rose by 5.8% in the year to December and 6.6% in the 12 months to March. Both readings reflected the fastest growth since the 1980s. The Consumer Price Index and the Producer Price Index, two other key gauges for inflation, rose 8.3% and 11%, respectively, in the year to April. The Federal Reserve’s own tolerance for inflation is just 2% per year. The central bank has indicated that a total of seven rate hikes — the maximum allowable under its calendar of meetings this year — are on slot for 2022. More rate adjustments could follow in 2023, until a return to the 2% inflation target is achieved, the Fed has said.