The Piton Investment Team reviews economic data regularly. When unusual numbers come up, they will dive into more fine-grained numbers behind the headline number. Such was the case this week, with the latest Industrial Production number, a rise in April of 0.7%, following a drop in March of 0.3%. While the services component of the U.S. economy has been the larger component for decades now, the Team has been keen on opportunities in manufacturing, particularly in the larger context of reshoring. The volatility of recent numbers prompted the team to look into the components that underlie the overall number. The report on Industrial Production number comes from one of a number of ongoing economic studies by the Federal Reserve, which published the most recent report here: https://www.federalreserve.gov/releases/g17/current/default.htm
The report summarizes, “In April, manufacturing output rose 0.6 percent, the index for mining ticked down 0.1 percent, and utilities output moved up 1.9 percent.” Mining and utilities have each been areas of investment in Piton portfolios in recent years, in keeping with our POWER (2025) and WISER (2026) strategic themes. As of this report, mining and utilities are still the most positive (100+ in 2025 and 2026) of the “Major Industrial Groups,” while other areas are not yet as robust(< 100), so the team remains vigilant about when the best investments might move from the earlier stages of industrial production to more finished stages.
The report continues, “Capacity utilization moved up to 76.1 percent, a rate that is 3.3 percentage points below its long-run (1972–2025) average.” That might seem discouraging, but it is also 1.3% above a year ago, and quite a rebound from its 2009 low of 66.5%.
Overall, then, the Piton Investment Team sees growth and room for more growth, but still needs to watch for when that growth feeds into fresh opportunities for the later stages of manufacturing. You can be sure the Team will be poised and ready to move toward those opportunities when they can see them coming!