Chart of the Day: Why the 3.5% jump in industrial production growth isn't good news

It still shrank 1.4% MoM.

According to Nomura, industrial production (IP) growth accelerated to 3.5% y-o-y in August from 3.0% in July, although sequentially it still contracted 1.4% (sa) m-o-m.

The 1.9% y-o-y contraction in biomedical manufacturing (due to lower production of active pharmaceutical ingredients) was a drag, but not enough to offset fully a 5.3% y-o-y increase in electronics output.

Here's more from Nomura:

Other key sectors offered support. Transport engineering output rose for a third consecutive month, with August posting the fastest pace at 18.1% y-o-y.

This increase was supported by higher demand for rig building and ship conversion projects to cater for ongoing growth in the marine & offshore engineering industries.

Chemicals output rose 4.9% y-o-y, improving across-the-board in the sector. The improvements in these areas suggest that the contribution to IP from the biomed sector becomes less volatile and begins to become more supportive, complementing the gradual improvements in other parts of the manufacturing sector.