INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

Industrial production decreased 0.5 percent in January after an increase of 0.5 percent in December. Output in the manufacturing sector declined 0.7 percent in January; about one-half of the decrease was a result of a drop of 6 percent in motor vehicles and parts. The output of utilities rebounded 2.3 percent, as temperatures moved back toward seasonal norms, while the output of mines moved down 1.2 percent. At 111.9 percent of its 2002 average, overall industrial output for the month was 2.6 percent above its January 2006 level. The rate of capacity utilization in January fell 0.6 percentage point, to 81.2 percent. Even so, it was 0.1 percentage point above its year-earlier level and 0.2 percentage point above its 1972-2006 average.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100				Percent change
	2006			2007 Jan.	2006			2007 Jan.	Jan. '06 to Jan. '07
	Oct.	Nov.	Dec.		Oct.	Nov.	Dec.
Total index	112.0	111.9	112.5	111.9	-.2	-.1	.5	-.5	2.6
Previous estimates	112.1	112.0	112.4		-.1	-.1	.4
Major market groups
Final Products	112.4	112.7	113.5	113.0	-.2	.3	.7	-.4	3.4
Consumer goods	107.3	107.6	107.7	107.5	-.3	.2	.1	-.2	1.7
Business equipment	128.4	129.3	132.3	130.1	-.1	.8	2.3	-1.6	8.7
Nonindustrial supplies	110.9	110.3	111.0	110.7	.2	-.6	.7	-.3	1.1
Construction	108.4	107.4	109.3	108.2	-1.7	-.9	1.8	-1.0	-2.8
Materials	112.0	111.6	112.0	111.3	-.2	-.3	.4	-.6	2.3
Major industry groups
Manufacturing (see note below)	113.4	113.4	114.3	113.5	-.8	-.1	.8	-.7	1.8
Previous estimates	113.6	113.5	114.3		-.6	.0	.7
Mining	100.9	100.7	102.2	101.0	-.1	-.2	1.4	-1.2	2.3
Utilities	109.8	109.2	106.3	108.7	5.0	-.5	-2.7	2.3	10.1

Market Groups

All major market groups recorded decreases in January. The output of consumer goods edged down 0.2 percent; a drop in consumer durables more than offset an increase in consumer nondurables. Among durables, the output of automotive products retreated 4.4 percent; smaller losses were recorded in miscellaneous consumer durables and in appliances, furniture, and carpeting, but the output of home electronics rose. The increase in consumer nondurables was the result of a jump of 3.9 percent in residential energy sales. The output of non-energy nondurables decreased 0.5 percent; an 0.8 percent drop in the production of foods and tobacco and a 0.6 percent decline in chemical production outweighed gains in the production of clothing and of paper products.

The output of business equipment fell 1.6 percent in January; declines in transit equipment and in industrial and other equipment more than offset an increase of 0.9 percent in information processing. A large decrease in truck assemblies held down production in transit equipment despite a further gain in commercial aircraft. Lower production of construction equipment and of farm machinery contributed to a drop of 2.8 percent in the index for industrial and other equipment, which left it at about the same level as in November. The output of defense and space equipment increased 1.2 percent.

The output of construction supplies fell 1 percent in January after an upwardly revised gain of 1.8 percent in December; production in January was 2.8 percent below its year-earlier level. The output of business supplies edged up in January for a second consecutive month. The production of non-energy materials dropped in January, while the output of energy materials was unchanged. Within non-energy durables, the production of both durable and nondurable materials fell. Declines in indexes related to motor vehicle parts contributed to the drop of 3.7 percent for consumer parts; the production of other durables was pulled down by production declines in metals and lower output in stone mining and quarrying and in sand and gravel mining.

Industry Groups

Manufacturing production decreased 0.7 percent in January; the factory operating rate, at 79.6 percent, was the lowest manufacturing utilization rate since October 2005. The production of durable goods decreased 1.3 percent in January despite gains of more than 1 percent for computer and electronic products and for aerospace and miscellaneous transportation equipment. Declines of 0.5 percent or more were registered in wood products, nonmetallic mineral products, primary metal, machinery, motor vehicles and parts, and miscellaneous manufacturing. The production of nondurable manufacturing edged down 0.2 percent in January and was just 0.3 percent above its year-ago level. Declines occurred in textile and product mills, paper, printing and support, and chemical production. Apparel and leather, petroleum and coal, and plastics and rubber registered increases. Production in the non-NAICS manufacturing industries (logging and publishing) gained 0.5 percent after a decline of 1.3 percent in December.

The output of natural gas utilities jumped 10.8 percent in January after two consecutive months of large decreases; the output of electric utilities rose 0.8 percent. Mining production decreased 1.2 percent; declines occurred in oil and gas extraction, coal mining, and nonmetallic mineral mining. Capacity utilization for industries in the crude stage of processing decreased nearly 1 percentage point, to 88.5 percent, a rate that is 2 percentage points above its 1972-2006 average. Capacity utilization for industries in the primary and semifinished stages edged down 0.1 percentage point, to 82.4 percent, and capacity utilization at the finished stage decreased 1.0 percentage point, to 77.6 percent.

Capacity Notice

The data in this release include preliminary estimates of industrial capacity for 2007. Total industrial capacity is projected to rise 2.1 percent in 2007 after having expanded 2.4 percent in 2006. Manufacturing capacity, which is estimated to increase 2.4 percent this year, also decelerates relative to 2006. The slower rates of increase for both manufacturing and total industrial capacity reflect a decline in manufacturing capacity for motor vehicles and parts. Excluding motor vehicles and parts, manufacturing capacity is estimated to expand 2.9 percent in 2007, slightly faster than in 2006. Mining capacity is estimated to increase 0.7 percent in 2007, about the same as in 2006, and utilities capacity is projected to expand 1.3 percent, about 0.8 percentage point slower than in 2006.

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