INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

Industrial production declined 0.1 percent in January. Output fell 1/4 percent per month, on average, in the three months from November through January after having dropped 0.5 percent per month over the preceding twelve months. At 136.5 percent of its 1992 average, output in January was 5.2 percent below its level in January 2001. After decreases in fourteen of the preceding fifteen months, manufacturing output was unchanged; one factor preventing another drop in manufacturing was a substantial rebound in steel production after a large drop in December. The output of utilities decreased 0.7 percent, as temperatures remained unseasonably mild, and the output at mines declined 0.5 percent.

Capacity utilization for total industry edged down 0.2 percentage point in January, to 74.2 percent, a level well below its 1967-2001 average of 81.9 percent. Because investment is expected to remain weak, capacity is projected to expand only 1.0 percent in 2002, the slowest rate of increase for this statistic since it began in 1967.

 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION:  SUMMARY
 Seasonally adjusted
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                    1992=100                     |                  Percent change
                               | ----------------------------------------------- | -------------------------------------------------
                               |       2001                                2002  |   2001                    2002  |    Jan. '01 to 
 Industrial production         |       Oct.        Nov.        Dec.        Jan.  |   Oct.    Nov.    Dec.    Jan.  |      Jan. '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total index                  |      137.7       137.1       136.7       136.5  |    -.6     -.4     -.3     -.1  |           -5.2 
     Previous estimates        |      137.5       136.9       136.7              |    -.7     -.4     -.1          |                
                               |                                                 |                                 |
  Major market groups:         |                                                 |                                 |
  Products, total              |      126.8       126.7       126.6       126.2  |    -.7     -.1     -.2     -.3  |           -4.9 
     Consumer goods            |      119.6       119.9       120.8       120.3  |    -.3      .3      .7     -.5  |            -.6 
     Business equipment        |      166.9       166.9       164.1       164.7  |    -.9      .0    -1.7      .4  |          -12.7 
     Construction supplies     |      134.6       134.3       135.2       134.2  |   -2.5     -.2      .7     -.7  |           -3.3 
  Materials                    |      155.9       154.3       153.4       153.8  |    -.4    -1.0     -.6      .2  |           -5.5 
                               |                                                 |                                 |
  Major industry groups:       |                                                 |                                 |
  Manufacturing                |      142.1       141.8       141.3       141.3  |    -.5     -.2     -.4      .0  |           -5.1 
     Durable                   |      173.9       174.0       173.4       173.6  |   -1.3      .0     -.3      .1  |           -6.5 
     Nondurable                |      110.8       110.3       109.8       109.6  |     .3     -.4     -.4     -.2  |           -3.5 
  Mining                       |       99.5        98.8        97.4        96.9  |   -2.5     -.7    -1.4     -.5  |           -4.3 
  Utilities                    |      119.4       115.9       117.2       116.5  |    1.1    -2.9     1.1     -.7  |           -7.0 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                                                   |    Capacity
                               |                                Percent of capacity                                |     growth
                               | --------------------------------------------------------------------------------- | ---------------
                               |     Average        1982     1988-89       2001  |   2001                    2002  |    Jan. '01 to 
 Capacity utilization          |  1967-2001          Low        High       Jan.  |   Oct.    Nov.    Dec.    Jan.  |      Jan. '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total industry               |       81.9        71.1        85.4        79.3  |   75.0    74.7    74.4    74.2  |            1.3 
     Previous estimates        |                                                 |   74.9    74.5    74.4          |                
                               |                                                 |                                 |
  Manufacturing                |       80.9        69.0        85.7        77.6  |   73.3    73.1    72.8    72.7  |            1.2 
     Advanced processing       |       80.3        71.0        84.2        77.0  |   72.9    73.0    72.9    72.6  |             .7 
     Primary processing        |       82.0        65.7        88.3        78.4  |   73.9    73.1    72.6    72.9  |            2.0 
  Mining                       |       87.6        80.3        88.0        90.5  |   88.4    87.7    86.3    85.9  |             .8 
  Utilities                    |       87.6        75.9        92.6        93.4  |   85.7    82.9    83.4    82.6  |            5.2 
 -----------------------------------------------------------------------------------------------------------------------------------
 Note:  Estimates for January are preliminary.  Estimates from October to December are revised.
 
 
 

Market Groups

The output of consumer goods fell 0.5 percent, thereby reversing about half of the gain recorded over the preceding two months. The production index for appliances, furniture, and carpeting advanced for a third month; the January reading was 1.5 percent above its level in January 2001. However, output indexes for automotive products and for household audio and video equipment fell after sharp year-end increases. Motor vehicle assemblies totaled 12.2 million units (annual rate) in January, just below the December level, but still substantially above the levels achieved during much of last year. The output of consumer nondurables fell 0.4 percent. The output of food and tobacco dipped after several months of increases; also contributing to the drop in nondurables was another substantial drop in production in the category covering periodicals, books, and cards.

The production of business equipment advanced 0.4 percent; an increase in the production of industrial and other equipment was mostly offset by a drop in transit equipment. In the industrial and other equipment category, the output of farm machinery and construction equipment rebounded, although their output indexes remained well below their year-ago levels. The continued retrenchment in the production of commercial aircraft and related equipment led the overall drop in the output of transit equipment. The output of information-processing equipment was little changed; the production of communications equipment continued to contract significantly, but the output of other equipment, including computers, moved up further. The production of defense and space equipment climbed 1.2 percent, its fifth consecutive monthly increase.

The production indexes for construction supplies and for business supplies dropped about 3/4 percent. The decline in construction supplies followed an increase of similar size in December; output for this group has changed little, on net, since October. The output of business supplies has fallen between 0.7 percent and 1.1 percent in each of the past three months; it has dropped almost 0.7 percent per month, on average, over the past twelve months, and decreases have been widespread among its components.

The 0.2 percent rise in the output of materials was only the second monthly increase for the category since September 2000. The production of both durable and nondurable materials advanced 0.3 percent in January, while the index for energy materials edged up 0.1 percent. Among durables, a rebound in steel output and a gain in the manufacture of semiconductors were partly offset by a decrease in the production of motor vehicle parts. The output of semiconductors and related electronic components has risen more than 5 percent since its trough in August 2001. An increase in chemical materials, which reversed just part of the sharp loss posted over the preceding two months, contributed importantly to the gain in the output of nondurable materials.

Industry Groups

Manufacturing output was unchanged as a 0.1 percent rise in the production of durables was offset by a decrease of 0.2 percent in nondurables. In addition to the rebound in iron and steel, other notable gains among durable goods industries occurred in furniture and fixtures; stone, clay, and glass products; and industrial machinery and computer equipment. The output of motor vehicles and parts fell 1.2 percent; even so, it is one of only two major durable goods industries (along with lumber and products) with output indexes above their levels in January 2001. Among nondurables, the largest decreases in January were in printing and publishing, textiles, and food. The output indexes for textiles and for printing and publishing have fallen about 10 percent or more since January 2001; apparel and leather products have fallen by like amounts.

Capacity utilization in manufacturing edged down 0.1 percentage point, to 72.7 percent, a level about 8 percentage points below its 1967-2001 average. The operating rate for advanced-processing industries decreased 0.3 percentage point, while the rate for primary-processing industries increased 0.3 percentage point. Operating rates for all major manufacturing industries with the exception of petroleum refining remain below their long-term averages. The industry with the lowest operating rate is electrical machinery, which has had steep declines in the output of communications equipment and of semiconductors and related equipment since the beginning of 2001.

Relatively warm temperatures and the low levels of activity at factories have pushed the operating rate for utilities about 5 percentage points below its long-term average. The operating rate for mining has fallen about 6 percentage points since last spring, to a level 2 percentage points below its long-term average.

G.17 Release Tables: