INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2006 Revision Notice Below]

Industrial production decreased 0.6 percent in September after having been unchanged in August. For the third quarter as a whole, industrial production rose at an annual rate of 3.6 percent, down from the rapid pace of gains in the previous three quarters. Nonetheless, production at the end of the quarter was about 5-1/2 percent above its year-earlier level. Output in the manufacturing sector declined 0.3 percent in September, a decrease that slightly more than reversed its upwardly revised gain of 0.2 percent in August. The output of utilities plunged 4.4 percent in September, while the output at mines expanded 0.7 percent.

Capacity utilization for total industry declined 0.6 percentage point, to 81.9 percent. Even so, this rate of capacity utilization was higher than the rates recorded from mid-2000 to early 2006.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100				Percent change
	2006				2006				Sept. '05 to Sept. '06
	June	July	Aug.	Sept.	June	July	Aug.	Sept.
Total index	113.4	113.8	113.8	113.1	1.1	.3	.0	-.6	5.6
Previous estimates	113.4	113.9	113.7		1.1	.4	-.1
Major market groups
Final Products	115.1	115.3	115.7	114.9	1.4	.2	.3	-.7	5.1
Consumer goods	107.9	107.5	107.9	106.9	1.5	-.4	.3	-.9	.4
Business equipment	133.7	136.4	136.7	136.4	1.3	2.0	.2	-.2	18.5
Nonindustrial supplies	112.3	112.7	112.0	111.4	.6	.3	-.5	-.6	2.8
Construction	113.4	114.1	113.8	113.3	.1	.6	-.3	-.4	3.2
Materials	112.1	112.5	112.5	111.9	.9	.4	.0	-.5	7.1
Major industry groups
Manufacturing (see note below)	115.1	115.5	115.8	115.4	.9	.4	.2	-.3	5.9
Previous estimates	115.1	115.5	115.5		.9	.4	.0
Mining	101.3	101.1	100.6	101.3	.9	-.2	-.5	.7	12.2
Utilities	109.2	109.9	108.9	104.1	2.9	.6	-.9	-4.4	-3.6

Market Groups

Production in all major market groups declined between August and September. The output of consumer goods fell 0.9 percent; the decrease was led by a weather-related pullback in the output of consumer energy products and by a drop of 1.8 percent in the output of consumer durables. Among durable consumer goods, the production indexes for automotive products and for appliances, furniture, and carpeting both fell about 2-1/2 percent. The production of miscellaneous durable goods edged down, while the output of home electronics rose 1.0 percent. The output of non-energy nondurable consumer goods posted a small gain, as a step-up in the production of foods and tobacco slightly more than offset lower output of chemical products and a second month of declines in the output of clothing and of paper products.

The output of business equipment slipped 0.2 percent in September. The production of industrial and other equipment fell 1.2 percent, which more than offset increases in the output of transit equipment and of information processing equipment. For the third quarter as a whole, business equipment rose 11.7 percent (annual rate), the fourth consecutive quarterly gain in excess of 10 percent. The output of defense and space equipment moved higher in September, but the increase for the quarter--a gain of 3.9 percent (annual rate)--marked a third quarter of decelerating production.

The output of construction supplies declined for a second month, to a level about the same as that of four months earlier. The production of business supplies also moved lower for a second month. Materials output turned down in September after having been unchanged in August; outside of equipment parts, which continued to climb steeply, all major categories of materials declined.

Industry Groups

The declines in manufacturing production during September were broadly based. Durable manufacturing production decreased 0.4 percent. Industries for which output fell 1 percent or more included wood products, nonmetallic mineral products, machinery, motor vehicles and parts, furniture and related products, and electrical equipment, appliances, and components. Primary metals declined 0.5 percent, and fabricated metal products edged down 0.1 percent. In contrast, the output of computer and electronic products increased 1.1 percent, and the output indexes for aerospace and miscellaneous transportation equipment and for miscellaneous manufacturing both posted gains of 0.5 percent. Nondurable manufacturing edged down 0.2 percent, as the output of chemicals, plastics and rubber products, textile and product mills, and apparel and leather all decreased significantly. However, the output of petroleum and coal products turned up sharply, and the production of food, beverage, and tobacco products advanced.

Mining output also turned up in September and increased 1.8 percent (annual rate) for the third quarter as a whole. The increase in September reflected a higher rate of crude oil extraction as well as a pickup in mined construction supplies, such as stone, sand, and gravel.

In September, the manufacturing utilization rate declined 0.4 percentage point, to 80.8 percent, a rate that is 1 percentage point above its 1972-2005 average. By stage of process, the operating rate for industries at the crude stage climbed 0.2 percentage point, to 89.0 percent. In contrast, the operating rate for industries at the primary and semifinished stages fell 1 percentage point, to 82.6 percent, just 0.5 percentage point above the long-run average for this group. The operating rate for industries at the finished stage moved down 0.4 percentage point, to 79.6 percent.

Notice

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue an annual revision to the index of industrial production (IP) and the related measures of capacity and capacity utilization late this year; the publication date is yet to be determined and is conditional on the date of issuance of the 2005 Annual Survey of Manufactures. The revised IP indexes will incorporate data from the 2004 and 2005 Annual Surveys of Manufactures and from selected editions of the 2004 and 2005 Current Industrial Reports, all from the U.S. Census Bureau. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2004 and 2005 will also be incorporated. The updating will include revisions to the monthly indicator for each industry (either product data or input data) and to seasonal factors.

Capacity and capacity utilization will be revised to incorporate preliminary data from the Census Bureau's 2005 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 the revision is published, it will be available on the Board's website at www.federalreserve.gov/releases/G17. The revised data will also be available through the website of the Department of Commerce. Further information on these revisions can be obtained from the Board's Industrial Output Section (telephone number 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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Supplemental Monthly Release   Other formats: ASCII | PDF (144 KB)
Annual Revision Release   Other formats: ASCII | PDF (150 KB)

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