U.S. economists are rushing to blame Hurricane Sandy for a terrible industrial production result this morning – a decline in October of 0.4 per cent – but, in truth, the trend of weak data began long before the storm.
November began with a positive non-farm payroll number that signalled a U.S. economy strengthening much faster than economists expected, but the outlook quickly deteriorated from that point. The first hint came on Nov. 9 with a disappointing wholesale inventories report suggesting that goods were being stockpiled rather than sold. Five days later, U.S. retail sales (less gasoline and autos) for October came in drastically below expectations – minus-0.3 per cent versus consensus estimates of 0.4-per-cent growth. The Philadelphia Fed index, an index of regional manufacturing activity, added to the misery with a 10.7-per-cent decline rather than the expected positive 0.2 per cent.