Industrial Production figures released yesterday show continued upward movement in all the segments relevant to trucking.

October IP overall was up 0.7% vs. September. This figure represents a level 5.3% below the pre-recession 2007 average, but is up 3.9% from October, 2010.

The critical automotive industry posted a 3.1% increase vs. last month. Unfortunately, just as the Japanese manufacturers returned to 100% production, flooding in Taiwan may have a slight to moderate negative impact on output for November.
Consumer products were up overall, with durables (automotive products, furniture, appliances, etc.) up 2.1%. Nondurables (food, clothing, paper products, etc.) were flat.

Looking at larger trends, specifically capacity utilization for the three stage-of-process groups, we see that output at the crude stage is 3.5% above its historical average. The primary and semifinished stage is 7.3% below the historic average, and the finished stage is 0.1% below. The increase at the crude level is encouraging, since this is the starting point for goods and products. The decrease in the semifinished stage may represent shifts in production strategies that may make it difficult to reach the historic average. The finished stage data is positive since products in this segment require skill and technology to complete.

So, how is all this relevant to trucking? Since America’s industrial sector has driven the rebound in trucking since late 2009, continued upward movement in output points to continued upward movement in demand for freight capacity and hauling. New truck orders and sales, as well as used truck demand, should continue to benefit.