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As is the case with most indicators, Wall Streeters want to get a preview of what’s inside the Industrial Production and Capacity Utilization report: the earlier they can approximate the industrial production index readings, the earlier they can capitalize on any anomalies in the numbers. Useful tools in this project are the number of worker hours in the Department of Labor’s monthly employment report. This chapter’s “tricks” describe how market participants use the Labor Department’s data in forecasting the industrial production indexes.


As noted above, when the actual data are not available, the Federal Reserve may estimate industrial production based on the number of production-worker hours. Wall Street economists use the same statistics in a simple back-of-the-envelope calculation to predict the industrial production index reading up to two weeks before it is released. Here’s what the computation would look like using the data in the Bureau of Labor Statistics’ March 2002 Employment Situation report, released on April 5 of that year. The report stated that in February 2002, 16.869 million people were employed in manufacturing, working an average of 40.7 hours a week, whereas in March, 16.831 people worked 41.1 hours a week on average. The first step in the computation i....
February: 16.869 million workers × 40.7 hours = 686.5683 mh
March: 16.831 million workers × 41.1 hours = 691.7541 mh


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