The most recent data on U.S. industrial output indicates that shippers could see a boost in business.
Ships have been dealing with an excess of capacity lately. Carriers' orders put plenty of ships in the pipeline, especially as maritime vessels grow larger, but retail demand industrial production and manufacturing output never met expectations. This left carriers with too much capacity and little to do about it. However, it seems industrial output in the U.S. increased more than expected in recent months, which could be a good sign for any company exporting goods from the country.
Industrial production increased 0.9 percent in January after a 0.7 percent drop the month prior, according to the Federal Reserve's most recent report on industrial production and capacity utilization. It noted that there is a chance output which would have been higher if not for a bout of harsh winter weather. The 0.9 percent increase is higher than what some industry experts expected. For example, analysts at Bloomberg forecasted a 0.2 percent uptick prior to the Fed's report. Manufacturing output also increased in January, the report stated. It jumped 0.5 percent in the first month of 2016. That represents a 1.2 percent year-over-year gain.
These increases follow lengthy periods of contraction, which could have a negative impact on shippers who are often tasked with moving the goods the industrial and manufacturing sectors produce. The Fed's seasonally adjusted industrial production index fell through the third quarter of 2015, the Journal of Commerce (JOC) explained. August, September, November and December all saw drops in manufacturing output.
Now shippers will have to let the next few months play out to see whether the Fed's positive report was false hope or a sign that they will soon see their capacity tighten, even just slightly.