Industrial Production data for Q4 and for full-year 2016

February 21, 2017

Bottom line:  More good news from another critical front: Industrial production rose in 2016 — with the main rise coming in the fourth quarter, thanks to a sharp recovery in the high-tech sector. Employment in industry just about held steady — better than the cries of woe from industrialists had suggested. All this provides a strong tailwind for 2017.

Specifics:

  • Production in the industrial sector, which includes manufacturing, mining & extraction and quarrying, posted a 1.6% rise in 2016.
  • This gain came in the sectors categorized as non-high-tech in terms of technological intensity: the medium-high, medium-low and low-technology sectors all gained– between 2.2% and 5.7% — while the high-technology sector declined by 5.8% over the year.
  • But after declining steadily from April 2015 through July 2016, high-tech production came roaring back in September-December 2016. The rate of increase rose every month, so that the annualised rate of growth in October-December was 8%.
  • In terms of employment, the industrial sector managed to add a few jobs in 2016 (a 0.2% increase overall), although the high-tech sector lost 1%.The employment picture actually deteriorated in the fourth quarter.
  • Actual hours worked was the same story: a slight gain overall, but a decline in the high-tech sector, both for the fourth quarter alone and for the full year.
  • Sales increased in the fourth quarter both to the domestic market (by 1.1%) — led by the high-tech sector — and to the export market (by 3.2%). However, the increase in exports was due entirely to a 25%+ surge in sales from the medium-low sector, while high-tech exports fell both in October-December and for the full year.

Overall, the strength of industrial production in the fourth quarter of 2016 provides a strong tailwind for 2017 — especially with the new Intel plant, scheduled to begin production in the second half, set to boost production and exports.

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