INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

Definition

Another good resource for forex brokers and traders is the Industrial Production and Capacity Utilization (IPCU), an index that measures changes in the output levels of the US economy’s industrial sector.

Both products (business equipment, intermediate goods, consumer goods, and materials) and industry (utilities, mining, and manufacturing) are represented in the report.

The data is based on employment records detailing the number of hours worked by employees in the industrial sector. The total amount of US industrial production for each month is expressed as a percentage of gross production from a previous baseline year; the IPCU also breaks down percentage changes from month to month and from year to year.

FX Trading Importance

The well-rounded forex broker or trader will consider the IPCU to be an important tool in gauging the future performance of assets in the market. Consequently, the report can sometimes trigger increased buying or selling pressures in certain industries and in forex trading as well.

Although the industrial sector only represents around 20% of the Gross Domestic Products, GDP changes can be heavily concentrated in this sector. Therefore, the IPCU provides information that suggests the probable course of future inflation. In essence, a forex trader will look at the IPCU as a concentrated version of the GDP.