Industrial Production: A Timely Indicator for Future Inflation

By Advisorymandi
20-June-2018 11:46:00 AM
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Industrial Production: A Timely Indicator for Future Inflation

Economic indicators have a strong impact on currencies and global economy. Most market traders are interested in economic indicators because these indicators have an impact on the value of the currency. And not just the currency market which is influenced by the economic indicators but also the stock market and commodity market. Or in other words, you can say that economic indicators measure how strong an economy of a country is.

As industrial production is considered as a crucial economic indicator to measure future inflation, each month the Federal Reserve releases the data or report on industrial production which can be accessed through a live economic calendar. The data on industrial production covers the industrial sector like manufacturing, mining, gas & utilities etc. The report collected can help in illustrating changes in the economy. This data includes the figures based on the raw volume of goods produced by industrial factories, mines, and electric utilities on monthly basis.

The importance of industrial production as timely indicator comes through when the supply of basic materials get tight – either of corporate clients or manufacturers. Even the Federal Reserve keeps a close eye on the figures for industrial production data in believing that inflation shows itself first at the industrial level.

 

Advantages of Industrial Production

  • In measuring the industrial production, sector breakdown allow to inspect the relative performance of different lines of business.
  • It is a timely indicator which releases on regular basis and can be easily accessed through the economic calendar.

Disadvantages of Industrial Production

  • One of the major flaws of industrial production in checking the strength of a country’s economy is the absence of measuring services as well as construction production. The industrial production only deal with physical goods-producing industries and firms.

Final Thoughts: –
In a nutshell, we can say that industrial production is one must-have economic indicator and as important as GDP and CPI. It is because of the industrial sector where the inflation comes first. And industrial production is one economic indicator which can help investors, traders, and digital participants to monitor the changes in the country’s economy.

If you have any query or would like to add something up, then don’t forget to mention in the comment section below.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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Sanjay Kumar
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Sanjay Kumar
5 months 21 days ago

Agreed! Industrial Production is equally important as CPI and GDP. In fact, IIP is somehow related to GDP. So, if the IIP is high then GDP is most likely to grow up at some point.

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