INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[Annual Revision Notice Below]

Industrial production increased 0.1 percent in January for a second consecutive month. Output in the manufacturing sector was unchanged in January, as lower output of motor vehicles and parts offset a small net gain elsewhere. The output of utilities climbed 2.2 percent, while the output of mines moved down 1.8 percent. At 114.2 percent of its 2002 average, overall industrial production was 2.3 percent above its January 2007 level. The rate of capacity utilization in January was unchanged, at 81.5 percent, a rate 0.4�percentage point above its year-earlier level and 0.5�percentage point above its 1972-2007 average.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100				Percent change
	2007			2008 Jan.	2007			2008 Jan.	Jan. '07 to Jan. '08
	Oct.	Nov.	Dec.		Oct.	Nov.	Dec.
Total index	113.5	114.0	114.1	114.2	-.6	.4	.1	.1	2.3
Previous estimates	113.7	114.0	114.0		-.5	.3	.0
Major market groups
Final Products	114.2	114.7	115.0	115.3	-.8	.4	.2	.3	2.3
Consumer goods	108.5	108.7	108.7	109.0	-.9	.2	.0	.3	1.5
Business equipment	133.5	134.4	135.6	136.1	-.5	.6	.9	.4	5.6
Nonindustrial supplies	110.8	110.8	110.9	110.9	-.6	-.1	.1	.0	.8
Construction	107.8	107.2	108.3	107.1	-1.4	-.5	1.1	-1.1	-1.2
Materials	113.9	114.5	114.5	114.4	-.3	.5	.0	-.1	2.8
Major industry groups
Manufacturing (see note below)	115.4	115.7	115.9	116.0	-.6	.3	.2	.0	2.0
Previous estimates	115.4	115.7	115.7		-.6	.3	.0
Mining	101.4	103.1	103.0	101.1	-.3	1.7	-.1	-1.8	.9
Utilities	109.0	109.4	109.2	111.6	-.7	.4	-.2	2.2	6.2

Market Groups

The production of consumer goods increased 0.3 percent in January: Consumer energy products advanced, consumer non-energy nondurables remained unchanged, and consumer durables fell. Both higher fuel output and an increase in residential energy sales contributed to the jump of 2.9 percent in the index for consumer energy goods. Among non-energy nondurables, small gains in the production of food and tobacco and of paper were offset by declines for chemicals and for clothing. Among consumer durables categories, the production of appliances, furniture, and carpeting dropped 2.1 percent, and the output of automotive products fell 1.2 percent; however, the output of home electronics and of miscellaneous consumer durables rose.

The output of business equipment rose 0.4 percent in January; increases in information processing equipment and in transit equipment outweighed a decrease in industrial and other equipment. The index for information processing equipment rose 1.6�percent as a result of further moderate gains in most of its components. The increase of 0.7�percent in transit equipment was concentrated in civilian aircraft; auto and truck assemblies both declined. Lower production indexes for machinery used in mining, in basic industry, and in farming contributed to the decrease of 0.4�percent in the index for industrial and other equipment.

The output of defense and space equipment increased 0.9�percent after having been unchanged in December. Gains were widespread among its components.

The output of construction supplies fell 1.1 percent in January after a rise of the same magnitude in December; production in January was 1.2 percent below its year-earlier level and about 4 percent below its peak in 2006. The output of business supplies increased 0.5 percent.

The production of non-energy materials edged down 0.1 percent in January, while the output of energy materials was unchanged. Among non-energy materials, the index for durable materials declined 0.2 percent. For the second consecutive month, a gain in equipment parts partly offset decreases in consumer parts and in other durable materials. In January, the advance in equipment parts was broadly based. Declines in indexes related to motor vehicle parts contributed significantly to the overall decrease for consumer parts, while the production of other durable materials was restrained by declines in metals, in plastics, in sawmills, and in stone, sand, and gravel mining. The output of nondurable materials was unchanged, as an increase in chemical materials was offset by large declines in textile materials and paper materials. The output of energy materials was unchanged; the output of utilities rose, but oil and gas extraction and related operations fell.

Industry Groups

Manufacturing production was unchanged in January after an increase of 0.2 percent in December. The factory operating rate decreased 0.1 percentage point in January, to 79.7 percent, a level 0.1 percentage point below its 1972-2007�average. The index for durable goods was unchanged. The indexes for computer and electronic products, for nonmetallic mineral products, and for aerospace and miscellaneous transportation equipment all posted sizable gains. However, output declined for wood products, primary metals, motor vehicles and parts, and furniture and related products. The production of nondurables edged up 0.1 percent. The output of petroleum and coal products advanced 2.6�percent, and the output of food, beverage, and tobacco products rose 0.4�percent. In contrast, the output index for textile and product mills fell 2.7 percent, and the output indexes for plastics and rubber products and for printing and support each fell about 1.5 percent. The output of non-NAICS industries (publishing and logging) edged up 0.1�percent.

The output of electric utilities increased 2.1 percent in January, and the output of natural gas utilities climbed 3.0 percent. The operating rate at utilities rose 1.8�percentage points, to 87.7 percent, a level 1.0 percentage point above its 1972-2007 average. Mining production fell 1.8 percent, with widespread decreases among its components. The capacity utilization rate for mining declined 1.8 percentage points, to 90.6 percent, a rate 3.1 percentage points above its long-run average.

Capacity utilization at industries grouped by stage of processing changed as follows: For the crude stage, utilization decreased nearly 1 percentage point, to 89.8�percent, a rate that is 3.2 percentage points above its 1972-2007 average. For the primary and semifinished stages, utilization increased 0.2 percentage point, to 81.9 percent. For the finished stage, utilization was unchanged at 78.3 percent.

Capacity Notice

The data in this release include preliminary estimates of industrial capacity for 2008. Measured fourth quarter to fourth quarter, total industrial capacity is projected to rise 1.9 percent this year after having expanded 1.8 percent in 2007. Manufacturing capacity is estimated to increase 2.1 percent in 2008, the same amount as in 2007. In 2008, mining capacity is estimated to expand 0.7 percent, and utilities capacity is projected to rise 1.9 percent; both rates of increase would be slightly faster than for last year. With the publication on March 28, 2008, of the annual revision to industrial production, capacity, and capacity utilization, these estimates will be updated to reflect more-comprehensive source data, including the 2006 Survey of Plant Capacity, physical capacity data from government and trade sources, and the revised production indexes.

Revision 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 on March 28, 2008. The revised IP indexes will incorporate data from the 2006 Annual Surveys of Manufactures and data from selected editions of the 2006 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 2006 will also be incorporated. The updating will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry as well as changes in the estimation methods for some series. Any changes to methods for estimating the output of an industry will affect the index from 1972 to the present.

After the publication of the revision, later monthly releases will include new or revised indexes for a six-month reporting window: one month of new data and revisions to the previous five months of data. The new longer reporting window will allow the incorporation of additional lagging data before an annual revision. Over the past year, with a six-month window, an additional 3 percent to 4 percent of IP would have reflected source data. The longer reporting window will cause the latest month of data shown for a few indexes to be as many as five months earlier than the latest value for aggregate industrial production; data for detailed production indexes are not shown in the supplement to the G.17 until either the underlying data are available or the reporting window is closed. Currently, the data issued for only one or two of the published indexes would be affected by this change.

Capacity and capacity utilization will be revised to reflect the revised production indexes and to incorporate data from the Census Bureau's 2006 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