Positive signals from industrial production?
Industrial production is a proxy for the level of manufacturing in the economy, and last week’s report showed the highest growth rate in three years. Not only is this positive for the manufacturing sector and those companies tied to it, but it is also an indication that a recession may be unlikely in the near term.
3 mins Reading time
Published on 09 December 2025
Last week’s economic news brought a report on industrial production, a measure of manufacturing activity in the U.S. economy. The metric grew 1.6% year over year in September, the largest acceleration in three years and an indication that cyclical sectors may be improving. While this growth is just below the historical average, the upward trend suggests improving momentum, which we view as encouraging.
On the heels of this report, we remind investors that industrial production typically slows as the country approaches a recession. Now, however, the indicator is on the rise and broadening beyond artificial intelligence spend, which is positive for future economic growth.
We believe manufacturing will continue to improve in 2026 as lower interest rates and pro-growth provisions of the recent tax and spending legislation stimulate investment. This trend supports our outlook for gross domestic product at approximately 2%.
851650 Exp : 09 December 2026
YOU MIGHT ALSO LIKE
Tensions between the U.S./Israel and Iran have recently boiled over into a military conflict, which has given many investors the jitters. However, our research shows that equity market pullbacks resulting from geopolitical events are often short lived with the S&P 500 typically higher in the months following these events.
Gross domestic product undershot expectations last quarter, but the shortfall appears driven more by the temporary government shutdown than broad-based weakness. Consumer demand remains resilient, and with supportive fiscal policy, easing financial conditions and a steady labor market, the outlook points to a modest acceleration in economic activity this year.
Equity volatility is rising, but all is not what it seems. The technology sector is weighing on the S&P 500 while value and cyclical stocks lead. A market rotation is underway as many investors begin to favor companies beyond tech.
Capex as a catalyst
Capex as a Catalyst
Improved business confidence and recent tax legislation are compelling corporations to reinvest their cash flows in their businesses. We believe this is a positive signal for economic growth.
