Industrial Production

Industrial production (often abbreviated IP) tracks how much physical stuff an economy is making — everything from steel and semiconductors to electricity and extracted minerals. Because it focuses on tangible output rather than dollar sales, the index is adjusted to strip out price changes, which is what "real output" means. A reading of 105, for example, means output is 5 percent higher than it was in the base year — not that it costs 5 percent more. You can see current industrial output data across countries on the indicators page.

The index is a composite: manufacturing typically carries the largest weight, followed by mining (which includes oil and gas extraction), and then utilities such as electricity and natural gas distribution. Each sub-sector is weighted by its share of the overall economy, so a surge in car manufacturing will move the headline figure more than a similar surge in a niche industry. Economists read industrial production as a coincident indicator — one that tends to rise and fall roughly in step with the broader business cycle rather than leading or lagging it significantly.

A frequent point of confusion is distinguishing industrial production from retail sales. IP measures what is being made; retail sales measure what is being bought at the consumer level. The two can diverge — for instance, factories can keep producing while inventories pile up if consumer demand softens. Tracking both together gives economists a clearer view of whether supply and demand are moving in sync.