INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2005 Revision Notice Below]

Industrial production increased 0.6 percent in December after gains of 0.8 percent in November and 1.0 percent in October. For the fourth quarter as a whole, industrial production increased 3.8 percent at an annual rate. Manufacturing output rose 0.2 percent in December but was held back by a decrease of 2.8 percent in the production of motor vehicles and parts. The output of utilities climbed 2.7 percent; the output at mines advanced 2.5 percent and was spurred in part by the continued recovery of energy-related industries that were affected by the recent hurricanes. Over the twelve months of 2005, total industrial production increased 2.8 percent, to 109.8 percent of its 2002 average, while total industrial capacity rose 1.7 percent. The rate of capacity utilization in December, at 80.7 percent, stood 1.0 percentage point above its year-earlier level and was 0.3 percentage point below its 1972-2004 average.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100				Percent change
	2005				2005				Dec. '04 to Dec. '05
	Sept.	Oct.	Nov.	Dec.	Sept.	Oct.	Nov.	Dec.
Total index	107.2	108.2	109.1	109.8	-1.3	1.0	.8	.6	2.8
Previous estimates	106.9	108.2	109.0		-1.6	1.3	.7
Major market groups
Final Products	109.4	111.3	111.1	111.4	-.6	1.7	-.1	.2	3.9
Consumer goods	106.4	106.0	105.3	105.5	.7	-.3	-.7	.2	1.3
Business equipment	115.1	123.5	125.1	125.7	-4.2	7.3	1.3	.5	10.1
Nonindustrial supplies	108.4	109.3	109.9	110.0	.3	.9	.6	.0	3.6
Construction	109.8	112.1	112.7	111.6	1.5	2.2	.5	-.9	5.2
Materials	104.5	104.8	106.7	108.0	-2.6	.3	1.8	1.2	1.4
Major industry groups
Manufacturing (see note below)	108.9	110.9	111.4	111.6	-.5	1.8	.4	.2	3.8
Previous estimates	108.8	110.8	111.1		-.7	1.8	.3
Mining	90.3	88.3	92.5	94.8	-9.0	-2.2	4.7	2.5	-5.6
Utilities	108.1	104.9	105.3	108.2	-.3	-3.0	.4	2.7	2.9

Market Groups

The output of consumer goods rose 0.2 percent in December and was up 1.3 percent from its year-earlier level. In December, the index for consumer nondurables climbed 0.9 percent, and both the energy and the non-energy components of the index advanced. Among non-energy nondurables, the index for foods and tobacco rose 1.1 percent, and the production of clothing increased 1.9 percent; these gains more than offset a second consecutive monthly decline in the index for paper products. The output of consumer durables fell 1.6 percent, and declines occurred in the indexes for automotive products; appliances, furniture, and carpeting; and miscellaneous goods.

The production of business equipment increased 0.5 percent and was about 10 percent above its year-earlier level. The gains in this category were largely driven by an increase of 1.7 percent in the index for information processing equipment. The indexes for transit equipment and for industrial and other equipment were little changed. The production of defense and space equipment continued to rise, and reached a level 9.7 percent higher than it was a year earlier. The index for construction supplies, which had surged over the past few months, fell back. The output of business supplies moved up 0.5 percent to stand 2.9 percent above its year-earlier level.

The production of materials increased 1.2 percent in December. The index for energy materials climbed sharply in November and December as the energy sector�s recovery from the recent storms continued. In addition, relatively colder temperatures in December led to an increase in electricity generation. Within the durable materials component, a drop of 1.1 percent in the output of consumer parts partially offset gains in the production indexes for equipment parts and for other durable materials. Within the nondurable category, the output of both paper and textile materials decreased. However, the output of chemical materials continued to recover from the hurricanes and posted an increase of 2.4 percent.

Industry Groups

Manufacturing production rose 0.2 percent in December, and the factory operating rate remained at 79.6 percent, which is 1.3 percentage points above its year-earlier level and 0.2 percentage point below its 1972-2004 average. The production of durable goods edged down 0.1 percent. The largest decline within this category was in the output of motor vehicles and parts, which fell 2.8 percent, although the indexes for wood products and nonmetallic mineral products also decreased more than 2 percent. The largest increase in the production of durable goods was in the computer and electronic products industry; gains also occurred in the indexes for aerospace and miscellaneous transportation equipment, primary metal, furniture and related products, and machinery. The production of nondurable goods rose 0.5 percent and included output gains of 1 percent or more for apparel and leather; food, beverage, and tobacco; and chemicals. The production of paper and products and of textile and product mills both decreased; the index for petroleum and coal products also fell back. Production in non-NAICS manufacturing (logging and publishing) decreased 0.1 percent.

The output of mines rose 2.5 percent in December after having jumped 4.7 percent in November, and the operating rate in mining moved up 2.1 percentage points, to 84.7 percent. Nevertheless, the production index for this industry stands 5.6 percent below its year-earlier level. In December, oil and gas extraction once again moved up but remained more than 6 percent below its level preceding Hurricane Katrina. Utilities output increased 2.7 percent; gains in both the electric and natural gas components contributed to the rise. The operating rate at utilities climbed to 88.1 percent.

By stage of process, capacity utilization for industries in the crude stage of processing climbed 2.2 percentage points, to 84.1 percent, but the rate was still about 4 percentage points below its average rate in the first half of the year. Capacity utilization rates for industries in the primary and semifinished stages and for finished goods producers changed little; both rates now stand just above their respective long-run averages.

Note: This release no longer contains tables on electric power use by industry. The December 15, 2005, release included results from the final survey of industrial electric power use conducted by the Federal Reserve Board. The rate of response to the voluntary survey had dropped significantly since the early 1990s, and coverage in 2004 was nearly 40 percent lower than at its peak in 1993. A notice seeking comment on the termination of the electric power survey was published in the Federal Register on September 29, 2005; by the end of the public comment period, November 28, 2005, no comments had been received. Although the indexes of electric power use will no longer be updated, the historical indexes will remain available on the historical data webpage for the G.17.

Revision of Industrial Production and Capacity Utilization

On November 7, 2005, the Federal Reserve Board issued its annual revisions to the index of industrial production (IP) and to the related measures of capacity and capacity utilization. The base year for the indexes of industrial production, capacity, and electric power use was advanced to 2002. Production indexes for twenty industries that had relied on electric power use as a monthly indicator were revised to use production-worker hours for the period 1997 to present.

The revisions to the IP index were derived principally from information contained in annual reports issued by the Census Bureau--namely, the 2003 Annual Survey of Manufactures, the revised data from the 2002 Census of Manufactures, and selected 2004 Current Industrial Reports. Annual data on minerals (except fuels) for 2003 and 2004 from the U.S. Geological Survey and updated deflators from the Bureau of Economic Analysis were also introduced. The updating also included revisions to the monthly indicator for each industry (either physical product data or production-worker hours) and revisions to seasonal factors.

Capacity and capacity utilization were revised to incorporate data from the Census Bureau�s 2004 Survey of Plant Capacity, which covers manufacturing, and new data on capacity from the U.S. Geological Survey, the U.S. Department of Energy, and other organizations.

The revision is available on the Board�s website at www.federalreserve.gov/releases/G17. The revised data are also available on the website of the 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 U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.

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: Historical Statistics for IP, Capacity, and Utilization: Total Industry
Ascii	Screen reader	Table 12: Historical Statistics for IP, Capacity, and Utilization: Manufacturing
Ascii	Screen reader	Table 13: Historical Statistics for IP, Capacity, and Utilization: Total Industry excluding Selected High-Technology Industries
Ascii	Screen reader	Table 14: Historical Statistics for IP, Capacity, and Utilization: Manufacturing excluding Selected High-Technology Industries

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