Skip to main content

Industrial Production - tech worse than we thought

Today, the Fed released the Industrial Production report for November. The market generally considered the headline number, which registered a decline of 06%, to be not as bad feared.

We always dig into the report to see how the technology industry fared. The news is not good. Below we show two sets of charts of Industrial Production: one set for the sub-category of Computers and Peripheral Equipment and one set for the sub-category of Semiconductors.

Computers and Peripheral Equipment --

The first chart below the presents data from February through October. This report was released in November. Starting in spring of 2008, growth virtually came to a halt. Production just managed to hit a minor peak in June and then started to fall off slowly. Clearly not a good thing but not exactly a disaster for the industry.

Industrial Production, Oct 2008 - Computers
This next chart presents the data from February through November and was released today. This time we display revised data for the June through September months. It can be seen that June wasn't a peak after all. Indeed, production for this sub-sector dropped off rapidly after May with the revised data 1% to 2% worse than the numbers that were initially released. If there is anything hopeful in the chart below, it is that the decline in production seems to be slowing down a little.

Industrial Production, Nov 2008 - Computers
Semiconductors --

The next two charts look at Semiconductors. In this first one, the data from February to October is presented. This was reported in November. Production hit a clear peak in July and began sliding.

Industrial Production, Nov 2008 - Semiconductors
This next chart, based on today's report, displays the data from February to November and presents revised data for the June through September months. Production was revised down approximately 1% from the month earlier report which can be seen in the steeper fall-off in the data.

Industrial Production, Oct 2008 - Semiconductors
Conclusion --

It is no wonder many tech companies are lowering guidance and announcing layoffs. With production dropping like this it is understandable that management has begun to hunker down. The size of the downward revisions is especially surprising and alarming.

The question is whether this is as bad as it gets. Though the rate of decline in both sub-categories slowed in November according to today's preliminary numbers, there is no assurance yet that Industrial Production in the tech sector has hit bottom. We may look at next month's report and see November's numbers revised downward, too.

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position. This first post in the series starts at the beginning: getting good investment ideas. Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets. As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street profess

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing wh

Interactive Ads - Google one-ups Yahoo again

Google's ( GOOG ) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages. I have written in the past on Yahoo's ( YHOO ) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format. Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format. The evolution of the Gadget Ad -- One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much any