IPI
From FXPedia
The Industrial Production Index (IPI) shows the monthly change in production for the major industrial sectors including mining, manufacturing, and public utilities, but does not include construction. Because production is measured in terms of output and not a dollar value representing the output, the index is not distorted by inflation making the IPI an accurate indicator of a country's industrial production capacity.
The IPI is very much in step with the business cycle and is considered an accurate barometer of manufacturing employment, average earnings, and personal income. A month-over-month increase in IPI suggests that companies in the industry are performing well and this will influence the markets. However, because the IPI covers only a limited aspect of the economy, it is not considered a high impact indicator.
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Effect on the Markets
FX Market
A positive or increasing IPI suggests continued growth and as long as there are no concerns for a rate hike to cool down the economy, investors may see a profit opportunity.
Bond Market
Like other reports that provide feedback on the state of the economy, an IPI suggesting increased economic growth causes concern for bond holders that a rate increase may be likely. For this reason, a bond sell-off may be triggered.
Stock Market
In addition to providing feedback on the growth of the economy, the IPI also breaks down production results for various sectors. Investors can use this information to target companies in growing sectors when looking for investment opportunities.
Market Relevance
Medium
When Published
Usually published the middle of each month.
Volatility
The IPI has a moderate effect on the markets.
