INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2005 Revision Notice Below]

Industrial production dropped 1.3 percent in September, as Hurricanes Katrina and Rita and a strike at a major aircraft producer significantly reduced output. At 118.0 percent of its 1997 average, output in September was 2.0 percent above its year-earlier level; for the third quarter as a whole, production rose 1.3 percent at an annual rate. For September, manufacturing output decreased 0.5 percent; for the quarter, it increased 2.3 percent at an annual rate. The output of mining, which includes many industries that were hit hard by storms, declined 9.1 percent in September and fell 16.5 percent at an annual rate for the third quarter. Production at utilities declined 0.9 percent in September, but output for the third quarter rose at an annual rate of 10.7 percent. Capacity utilization for total industry dropped 1.2 percentage points, to 78.6 percent, a rate that is 0.6 percentage point above its year-earlier level but 2.4 percentage points below its 1972-2004 average.

In September, storm-related production declines are estimated to have held down the change in total industrial production about 1.7 percentage points; in August, storm-related losses reduced the change in total industrial production nearly 0.4 percentage point. Oil and gas extraction and petroleum refining suffered because of the storms, which contributed importantly to a decrease of 5 percent in production by the energy sector in September. The largest effect of the storms outside the energy sector was in the manufacture of industrial chemicals. The strike in the aircraft industry reduced the change in total industrial output almost 0.5 percentage point.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	1997=100				Percent change
	2005				2005				Sept. '04 to Sept. '05
	June	July	Aug.	Sept.	June	July	Aug.	Sept.
Total index	119.4	119.4	119.6	118.0	.8	.0	.2	-1.3	2.0
Previous estimates	119.4	119.5	119.7		.8	.1	.1
Major market groups
Final Products	118.4	118.6	119.0	117.9	1.0	.2	.3	-.9	3.9
Consumer goods	114.4	113.8	114.4	114.7	1.1	-.5	.5	.2	3.6
Business equipment	128.8	131.4	130.9	126.0	.5	2.0	-.4	-3.7	4.0
Nonindustrial supplies	116.0	116.0	116.2	115.9	.4	.0	.2	-.3	2.7
Construction	109.1	109.9	110.9	111.2	-.9	.7	.9	.2	3.3
Materials	121.5	121.4	121.3	118.7	.7	-.1	-.1	-2.1	-.2
Major industry groups
Manufacturing (see note below)	121.2	121.4	121.8	121.1	.4	.1	.3	-.5	2.9
Previous estimates	121.2	121.3	121.7		.3	.1	.3
Mining	92.9	92.1	91.3	83.0	.3	-.9	-.8	-9.1	-7.2
Utilities	119.9	119.9	119.3	118.2	4.8	.0	-.5	-.9	3.0

Market Groups

The output of consumer goods rose 0.2 percent in September; for the third quarter this index advanced at an annual rate of 3.4 percent. The production of durable goods increased 1.8 percent in September, and all major categories posted gains. The output of automotive products rose 2.4 percent, and for the third quarter, it increased at an annual rate of 18.6 percent. The indexes for home electronics; appliances, furniture, and carpeting; and miscellaneous goods also rose in September. The output of consumer nondurable goods decreased 0.4 percent, for its third consecutive monthly decline; however, this index increased at an annual rate of 0.6 percent in the third quarter. The production of non-energy nondurable consumer goods was unchanged in September. The output of foods and tobacco rose 0.1 percent, and the production of consumer chemical products increased 0.3 percent. However, the index for paper products declined for a fourth consecutive month. Hurricane-related shutdowns contributed to a drop of 2.2 percent in the output of consumer energy products in September.

The index for business equipment declined 3.7 percent in September; the aircraft manufacturing strike was largely responsible for a drop of 24.3 percent in the production of transit equipment. The output of information processing equipment advanced 2.2 percent; for the third quarter, this index moved up at an annual rate of 23.4 percent. The production of industrial and other equipment rose 0.4 percent for the month and at an annual rate of 7.2 percent for the quarter. The production of defense and space equipment fell 3.4 percent in September, mainly as a result of storm-related effects on shipbuilding. The index for construction supplies increased 0.2 percent, but the output of business supplies declined 0.5 percent.

The output of materials fell 2.1 percent in September; the output of non-energy materials slipped 0.2 percent, and the production of energy materials dropped 6.8 percent. Among non-energy materials, output rose for all major categories of durable goods materials, and output fell for all major categories of nondurable materials. Storm-related disruptions contributed to the decreases in the output of energy materials and the output of chemical materials (a major category within nondurable materials).

Industry Groups

Manufacturing output fell 0.5 percent in September. The production of durables edged down 0.1 percent but increased at an annual rate of 7.6 percent in the third quarter. Gains in durables were widespread in September, with the only notable exception being the strike-affected aerospace and miscellaneous transportation equipment category. The output of primary metals advanced 1.7 percent and increased at an annual rate of 3.6 percent in the third quarter after two quarters of decline. The production of computer and electronic products accelerated in the third quarter and was led by gains in the communications equipment industry. The production of motor vehicles and parts advanced 2.2 percent in September and rose at an annual rate of 12.5 percent in the third quarter after having declined in the second quarter. Fabricated metal products; machinery; electrical equipment, appliances, and components; furniture and related products; and miscellaneous manufacturing also posted solid gains in output for the quarter. The production of nondurables decreased 1.2 percent in September. Hurricane-related shutdowns in the Gulf Coast region contributed to a drop of 3.3 percent in the production of chemicals and a decrease of 6.4 percent in the output of petroleum and coal products. Most other major nondurable goods industries posted small gains; however, the output of plastics and rubber products climbed 1.8 percent, and the production of paper declined for a third consecutive month. The output of non-NAICS manufacturing industries (publishing and logging) together declined 0.5 percent. Capacity utilization in manufacturing fell to 77.9 percent, a level 1.1 percentage points above that of September 2004.

The output at mines dropped 9.1 percent in September, a decrease driven by curtailments in the extraction of oil and gas in the Gulf of Mexico. Capacity utilization in mining fell to 79.1 percent. The output at utilities declined 0.9 percent, and the industry operating rate declined to 86.3 percent.

For industries by stage of process, capacity utilization at the crude stage sank 7.6 percentage points, to 77.6 percent; at the primary and semifinished stages, it declined 0.2 percentage point, to 80.2 percent; and at the finished stage, it fell 0.6 percentage point, to 77.6 percent.

Calculation of Hurricane Effects

Government and industry sources were used to measure the impact of Hurricanes Katrina and Rita on industrial production. Losses in the extraction of oil and gas are based on shut-in resources in the Gulf of Mexico reported by the Mineral Management Survey of the U.S. Department of the Interior. Information from the U.S. Department of Energy on production curtailments was used to estimate the impact of the storms on petroleum refining. Effects in the chemicals industry are based on detailed product data from an industry source. Outside of these industries, lost output is assumed to be proportional to U.S. Census Bureau measures of industry employment counts for counties declared eligible for disaster assistance by the Federal Emergency Management Agency.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity and capacity utilization on November 7, 2005. The production indexes will be revised throughout to reflect a new comparison base year of 2002. The revised IP indexes will incorporate data from the 2003 Annual Survey of Manufactures and from selected editions of the 2003 and 2004 Current Industrial Reports, all from the Census Bureau. Annual data from the Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2003 and 2004 will also be introduced. The updating will include revisions to the monthly indicator for each industry (either product data or input data) and revisions to seasonal factors.

Capacity and capacity utilization will be revised to incorporate preliminary data from the Census Bureau's 2004 Survey of Plant Capacity, which covers manufacturing, along with new data on capacity from the U.S. Geological Survey, the Department of Energy, and other organizations.

Once published, the revision will be available on the Board's website at www.federalreserve.gov/releases/G17. The revised data will also be available on the website of the U.S. Department of Commerce. Further information on these revisions is available from the Board's Industrial Output Section (telephone 202-452-3197).

NOTE: The statistics in this release cover output, capacity, and capacity utilization in the industrial sector, which the Federal Reserve defines as manufacturing, mining, and electric and gas utilities. Manufacturing comprises those industries included in the North American Industry Classification System, or NAICS, manufacturing plus the logging and newspaper, periodical, book and directory publishing industries that have traditionally been considered manufacturing and included in the industrial sector.

G.17 Release Tables:

Ascii	Screen reader	Summary: Industrial Production and Capacity Utilization
Chart		Chart 1: Industrial Production, Capacity, and Capacity Utilization
Chart		Chart 2: Industrial Production and Capacity Utilization
Chart		Chart 3: Industrial Production and Capacity Utilization, High Technology Industries
Ascii	Screen reader	Table 1: Industrial Production: Market and Industry Groups (percent change)
Ascii	Screen reader	Table 2: Industrial Production: Special Aggregates and Selected Detail (percent change)
Ascii	Screen reader	Table 3: Motor Vehicle Assemblies
Ascii	Screen reader	Table 4: Industrial Production Indexes: Market and Industry Group Summary
Ascii	Screen reader	Table 5: Industrial Production Indexes: Special Aggregates
Ascii	Screen reader	Table 6: Diffusion Indexes of Industrial Production
Ascii	Screen reader	Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities
Ascii	Screen reader	Table 8: Industrial Capacity: Manufacturing, Mining, and Utilities (percent change)
Ascii	Screen reader	Table 9: Industrial Production: Gross Value of Products and Nonindustrial Supplies
Ascii	Screen reader	Table 10: Gross-Value-Weighted Industrial Production: Stage-of-Process Groups
Ascii	Screen reader	Table 11: Electric Power Use: Manufacturing and Mining
Ascii	Screen reader	Table 12: Historical Statistics for IP, Capacity, and Utilization: Total Industry
Ascii	Screen reader	Table 13: Historical Statistics for IP, Capacity, and Utilization: Manufacturing
Ascii	Screen reader	Table 14: Historical Statistics for IP, Capacity, and Utilization: Total Industry excluding Selected High-Technology Industries
Ascii	Screen reader	Table 15: Historical Statistics for IP, Capacity, and Utilization: Manufacturing excluding Selected High-Technology Industries

Release dates | Historical data | Documentation
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Supplemental Monthly Release   Other formats: ASCII | PDF (144 KB)
Annual Revision Release   Other formats: ASCII | PDF (150 KB)

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