What Is Industrial Production Index (IPI)? How It Measures Output

The Industrial Production Index (IPI) is a measure of the output of the manufacturing, mining, and utility sectors of the economy. It is one of the most closely watched economic indicators, as it provides a timely and comprehensive assessment of the health of the manufacturing sector.

The IPI is calculated by the Federal Reserve Board of Governors. It is based on a survey of about 3,000 manufacturing, mining, and utility companies. The survey measures the change in the physical volume of output from one month to the next.

The IPI is a leading indicator of economic activity. A rising IPI suggests that the manufacturing sector is expanding, which is a positive sign for the overall economy. A falling IPI suggests that the manufacturing sector is contracting, which is a negative sign for the overall economy.

The IPI is often used to forecast future economic growth. A rising IPI suggests that economic growth is likely to accelerate in the future, while a falling IPI suggests that economic growth is likely to slow down in the future.

The IPI is also used to track the performance of the manufacturing sector relative to other sectors of the economy. A rising IPI suggests that the manufacturing sector is performing better than other sectors, while a falling IPI suggests that the manufacturing sector is performing worse than other sectors.

The IPI is a valuable tool for policymakers and businesses. It provides a timely and comprehensive assessment of the health of the manufacturing sector, which is an important driver of economic growth. The IPI can be used to forecast future economic growth and to track the performance of the manufacturing sector relative to other sectors of the economy.