INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

Industrial production rose 0.2 percent in May, to 139.3 percent of its 1992 average, and has risen almost 2 percent since its recent low in December 2001. Manufacturing output also increased 0.2 percent in May. Mining output climbed 0.7 percent, and utilities production fell 0.9 percent. The rate of capacity utilization for total industry edged up, to 75.5 percent, but was more than 6 percentage points below its 1967-2001 average.

Market Groups

The output of consumer goods was unchanged in May. Increases in durable goods offset decreases in nondurables. Among durables, the appliance, furniture, and carpeting market group advanced 1.7 percent, and home electronics, led by household audio and video equipment, rose 2.4 percent. However, the output of automotive products edged down 0.2 percent because of a reduction in motor vehicles assemblies. Among nondurables, non-energy and energy output contracted. In the non-energy category, which slipped 0.1 percent, a decline in the output of foods and tobacco more than outweighed a rise in the production of paper products. Despite its May increase, the index for paper products remained more than 9 percent below its level of May 2001. The indexes for clothing and chemical products were unchanged. The output of energy products fell 0.4 percent in May; lower production of fuels, primarily automotive gasoline, contributed to the decline.

The production of business equipment inched up 0.1 percent. The output of the industrial and other equipment category climbed 1.8 percent. An increase in the production of construction machinery contributed importantly to the rise, although gains were widespread across components of the index. The production of information processing equipment edged up 0.1 percent as gains in most components, including computers, more than offset weakness in communications equipment. A large reduction in the output of commercial aircraft was principally responsible for the 3.1 percent drop in the production of transit equipment. The index, which has fallen more than 19 percent in the past year, is at its lowest level since November 1996.

The production of construction supplies rose 0.4 percent in May and is almost 4 percent above its recent low in November 2001. The index for business supplies has risen slowly in recent months after having posted larger gains earlier in the year.

Materials production increased 0.3 percent in May, its fifth consecutive monthly gain. Output in the category reached its highest level since April 2001 but remained more than 5 percent below its recent peak in June 2000. The indexes for all major materials categories rose. A rise of 0.5 percent in the output of durable materials was led by the production of equipment parts and other durable materials. A gain of 0.2 percent for nondurable materials was led by textile materials and paper materials, and energy materials edged up 0.1 percent.

Industry Groups

Manufacturing output rose 0.2 percent in May. Production advanced among all durables industries except for motor vehicles and parts and aerospace and miscellaneous transportation equipment. The largest gains were in industrial machinery and equipment and electrical machinery, which continued their recent upward trends. These two industries include computers and office equipment and semiconductors and related electronic components, which have been strong over the past few months and have recovered the losses incurred in 2001. Increases in the output of lumber and products, fabricated metals, and miscellaneous goods also contributed to the expansion of durables. Among nondurables, increases in the output of rubber and plastics products, chemicals and products, printing and publishing, textile mill products, and paper and products more than offset declines in the output of food and tobacco products and of petroleum products.

The factory operating rate increased in May to 73.9 percent. The utilization rate for advanced-processing industries held at 72.8 percent, while the rate for primary-processing industries increased to 75.6 percent. The operating rate at utilities fell to 85.3 percent, and the operating rate for mining rose to 86.0 percent. With this release, capacity indexes have been revised from February 2002 forward.

 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION:  SUMMARY
 Seasonally adjusted
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                               |                    1992=100                     |                  Percent change
                               | ----------------------------------------------- | -------------------------------------------------
                               |       2002                                      |   2002                          |     May '01 to
 Industrial production         |       Feb.        Mar.        Apr.         May  |   Feb.    Mar.    Apr.     May  |      May '02
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total index                  |      138.1       138.7       139.1       139.3  |     .4      .4      .3      .2  |           -1.6
     Previous estimates        |      138.0       138.6       139.2              |     .3      .4      .4          |               
                               |                                                 |                                 |
  Major market groups:         |                                                 |                                 |
  Products, total              |      126.9       127.6       127.4       127.5  |     .2      .6     -.1      .1  |           -2.6
     Consumer goods            |      121.2       121.8       121.9       121.9  |     .5      .5      .0      .0  |             .4
     Business equipment        |      164.0       163.5       162.6       162.8  |    -.8     -.3     -.5      .1  |          -10.2
     Construction supplies     |      136.8       139.6       138.5       139.1  |     .3     2.1     -.8      .4  |             .3
  Materials                    |      157.1       157.5       159.0       159.5  |     .8      .3      .9      .3  |             .1
                               |                                                 |                                 |
  Major industry groups:       |                                                 |                                 |
  Manufacturing                |      142.9       143.5       143.8       144.1  |     .2      .5      .2      .2  |           -1.6
     Durable                   |      176.0       176.7       177.4       177.8  |     .2      .4      .4      .2  |           -2.7
     Nondurable                |      110.5       111.1       111.0       111.2  |     .2      .6     -.1      .2  |            -.2
  Mining                       |       96.6        95.4        96.4        97.1  |    -.3    -1.3     1.0      .7  |           -5.7
  Utilities                    |      120.3       122.0       123.1       122.0  |    3.9     1.4      .9     -.9  |            1.9
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                               |                                                                                   |    Capacity
                               |                                Percent of capacity                                |     growth
                               | --------------------------------------------------------------------------------- | ---------------
                               |     Average        1982     1988-89       2001  |   2002                          |     May '01 to
 Capacity utilization          |  1967-2001          Low        High        May  |   Feb.    Mar.    Apr.     May  |      May '02
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total industry               |       81.9        71.1        85.4        77.5  |   75.0    75.3    75.4    75.5  |            1.0
     Previous estimates        |                                                 |   75.0    75.3    75.5          |               
                               |                                                 |                                 |
  Manufacturing                |       80.9        69.0        85.7        75.8  |   73.5    73.8    73.8    73.9  |             .9
     Advanced processing       |       80.3        71.0        84.2        75.6  |   72.7    72.9    72.8    72.8  |             .6
     Primary processing        |       82.0        65.7        88.3        75.9  |   74.6    75.1    75.4    75.6  |            1.4
  Mining                       |       87.6        80.3        88.0        91.9  |   85.6    84.5    85.3    86.0  |             .8
  Utilities                    |       87.6        75.9        92.6        87.9  |   84.9    85.9    86.4    85.3  |            5.0
 -----------------------------------------------------------------------------------------------------------------------------------
 Note:  Estimates for May are preliminary.  Estimates from February to April are revised.

G.17 Release Tables: