INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2006 Revision Notice Below]

Industrial production rose 0.4 percent in December after a decrease of 0.1 percent in November. Output in November was previously estimated to have advanced; weaker data for a number of industries, particularly steel, led to the downward revision. For the fourth quarter as a whole, industrial production decreased 0.5 percent (annual rate). In the manufacturing sector, output increased 0.7 percent in December, and most major industry groups registered gains. The output of utilities fell 2.6 percent, the result of relatively mild temperatures during the month, while the output of mines moved up 0.8 percent. Over the twelve months ending in December, total industrial production increased 3.0 percent, to a level that was 112.4 percent of its 2002 average, and total industrial capacity expanded 2.4 percent. The rate of capacity utilization in December, at 81.8 percent, was 0.5 percentage point above its year-earlier level and 0.8 percentage point above its 1972-2005 average.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100				Percent change
	2006				2006				Dec. '05 to Dec. '06
	Sept.	Oct.	Nov.	Dec.	Sept.	Oct.	Nov.	Dec.
Total index	112.2	112.1	112.0	112.4	-.3	-.1	-.1	.4	3.0
Previous estimates	112.1	112.1	112.3		-.4	.0	.2
Major market groups
Final Products	112.7	112.4	112.7	113.4	-.1	-.3	.2	.6	2.9
Consumer goods	107.6	107.2	107.3	107.6	-.1	-.4	.1	.2	.6
Business equipment	128.5	128.6	129.8	131.8	-.1	.1	.9	1.6	10.4
Nonindustrial supplies	110.7	111.1	110.5	110.7	-.7	.4	-.5	.2	1.1
Construction	110.3	109.0	107.9	108.2	-.9	-1.1	-1.0	.2	-2.8
Materials	112.2	112.1	111.9	112.2	-.4	-.1	-.1	.2	3.8
Major industry groups
Manufacturing (see note below)	114.3	113.6	113.5	114.3	.0	-.6	.0	.7	3.3
Previous estimates	114.3	113.7	113.9		-.1	-.5	.3
Mining	101.0	101.1	100.6	101.4	1.1	.0	-.4	.8	4.7
Utilities	104.5	109.3	109.6	106.7	-3.9	4.6	.2	-2.6	-1.1

Market Groups

The output of consumer goods edged up 0.2 percent in December; a gain of 1.5 percent in consumer durables more than offset a small decrease in consumer nondurables. For the fourth quarter as a whole, consumer goods fell 0.8 percent (annual rate). The gains in consumer durables were widespread in December; automotive products advanced 2.3 percent, home electronics gained 1.9 percent, and smaller increases were recorded elsewhere.

The output of consumer nondurables, pulled down by a decrease in the index for residential energy sales, declined 0.2 percent. The output of non-energy nondurables in December was unchanged; a decline of 0.3 percent in the production of foods and tobacco offset gains in the production of clothing, of chemical products, and of paper products.

Broad-based advances lifted the output of business equipment 1.6 percent in December; for the fourth quarter as a whole, this index rose at an annual rate of 5.4 percent. Strength in commercial aircraft production continued to support gains in the index for transit equipment. The output of information processing equipment picked up 1.2 percent in December, the fourth consecutive month of gains around 1 percent. Industrial and other equipment production advanced 1.3 percent in December but was little changed for the quarter as a whole. For December, the production of defense and space equipment increased 0.8 percent.

Construction supplies output edged up 0.2 percent in December after four consecutive months of declines; for the fourth quarter as a whole, this index fell at an annual rate of more than 9 percent. The index for materials also edged up in December after several months of declines; the gains were broadly based except for energy materials, which declined.

Industry Groups

Manufacturing production increased 0.7 percent in December; however, output for the fourth quarter as a whole was down 1.4 percent (annual rate) from the third quarter. In December, the factory operating rate moved up 0.4 percentage point, to 80.4 percent, 0.6 percentage point above its 1972-2005 average. The production of durable goods increased 1.1 percent in December; the largest gains were in motor vehicles and parts and in computer and electronic product manufacturing. Most other major durable goods industries also showed gains; the exceptions were nonmetallic mineral products, fabricated metal products, and furniture and related products, all of which continued their recent monthly declines. Among the selected high-technology industries, gains in computer and peripheral equipment and in semiconductors and related electronic components more than offset a decrease in the output of communications equipment. After five months of declines, primary metal production, supported by an increase of 1.6 percent in iron and steel production, turned up in December. Likewise, machinery manufacturing advanced 1.2 percent after several months of declines. The production of nondurable goods, which increased 0.3 percent, included sizable gains for apparel and leather and for petroleum and coal products; smaller increases were posted in paper, in printing and support, and in chemicals. In contrast, the production indexes for food, beverage, and tobacco products, for textile and product mills, and for plastics and rubber products all declined. Production in the non-NAICS manufacturing industries (logging and publishing) edged up.

In December, the output of natural gas utilities dropped 8.9 percent, and the output of electric utilities decreased 1.4 percent. The gain in mining output was primarily due to increases in crude oil extraction and in nonmetallic mineral mining. Capacity utilization for industries in the crude stage of processing increased 0.2 percentage point, to 89.1 percent, a rate that is 2.7 percentage points above its 1972-2005 average. Capacity utilization for industries in the primary and semifinished stages edged down 0.2 percentage point, to 82.5 percent, and the capacity utilization for finished goods producers increased 0.5 percentage point, to 78.6 percent.

Revision of Industrial Production and Capacity Utilization

On December 11, 2006, the Federal Reserve Board issued its annual revision to the index of industrial production (IP) and the related measures of capacity and capacity utilization. The revised IP indexes incorporated data from the 2004 and 2005 Annual Surveys of Manufactures and data 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 were also incorporated. The updating included revisions to the monthly indicator for each industry (either product data or input data) and to seasonal factors.

Capacity and capacity utilization were 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.

The revision is available on the Board's website at www.federalreserve.gov/releases/G17. The revised data are also available through the website of the Department of Commerce. Further information on these revisions is available 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