The Federal Reserve Board's Industrial Production Index, which measures real production output for manufacturing, mining, and electric and gas utilities each month, shows that manufacturing production output declined to 102.1 in June from 102.7 in May, marking the second consecutive month of decline. And in a new analysis from Moody's Analytics, economists ponder whether that data will have any bearing on industrial space demand in the US. 

"The industrial production indices, whether for manufacturing or consumer goods, show that as industrial production accelerates, occupancy of industrial space – whether warehouse and distribution or flex/R&D – increases and higher rents follow," writes Moody's Ermengarde Jabir, who also notes "recent data reveals a shifting tide in the health and perception of the direction in which manufacturing in the US is headed, given ongoing macroeconomic developments, such as negative quarterly real GDP growth."

Jabir predicts rising interest rates will continue to increase borrowing costs this year and into 2023, putting downward pressure on goods. And 'there is also the chance of a domino effect, as manufacturing and the subsequent warehousing/distribution needs for these goods, might shrink, and, in turn, lower demand for industrial properties," Jabir writes.