INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[Annual Revision Notice Below]

Industrial production decreased 1.1 percent in August and was revised down in June and July to show smaller gains of 0.2 percent and 0.1 percent respectively. After little movement over the previous three months, factory output was down 1.0 percent in August, in part because of a drop of 11.9 percent in the production of motor vehicles and parts. Excluding motor vehicles and parts, the index for manufacturing decreased 0.3 percent. The output of mines declined 0.4 percent, and the output of utilities fell 3.2 percent, as temperatures in August were unseasonably mild.

Precautionary shutdowns in the Gulf of Mexico in advance of Hurricane Gustav partly curtailed refinery activity, petrochemical production, and the extraction of crude oil and natural gas; however, the estimated effect in August of disruptions due to the hurricane on total industrial production is estimated to have been less than 0.1 percentage point. At 110.3 percent of its 2002 average, total industrial production was 1.5 percent below its level of a year earlier. The capacity utilization rate for total industry fell to 78.7 percent, a level 2.3 percentage points below its average level from 1972 to 2007.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100						Percent change
	2008						2008						Aug. '07 to Aug. '08
	Mar.[r]	Apr.[r]	May[r]	June[r]	July[r]	Aug.[p]	Mar.[r]	Apr.[r]	May[r]	June[r]	July[r]	Aug.[p]
Total index	112.0	111.4	111.3	111.5	111.6	110.3	-.2	-.5	-.1	.2	.1	-1.1	-1.5
Previous estimates	112.0	111.3	111.1	111.6	111.8		-.2	-.6	-.2	.4	.2
Major market groups
Final Products	113.2	112.3	112.2	112.9	113.0	111.3	-.5	-.7	-.1	.6	.1	-1.5	-1.8
Consumer goods	106.7	106.1	105.9	106.6	106.8	104.7	-1.1	-.6	-.2	.7	.2	-2.0	-3.0
Business equipment	132.3	130.1	130.5	130.8	131.1	130.3	.9	-1.7	.3	.3	.2	-.6	.7
Nonindustrial supplies	106.7	106.6	106.2	106.0	105.7	104.9	-.4	-.2	-.3	-.2	-.3	-.7	-3.1
Construction	102.3	101.4	101.9	101.5	102.0	100.9	.1	-1.0	.5	-.3	.4	-1.0	-5.8
Materials	112.8	112.4	112.2	112.2	112.3	111.3	.2	-.4	-.2	.0	.1	-.9	-.6
Major industry groups
Manufacturing (see note below)	113.3	112.3	112.4	112.4	112.5	111.4	.1	-.9	.1	.0	.1	-1.0	-1.9
Previous estimates	113.2	112.2	112.3	112.4	112.8		.1	-.9	.0	.1	.4
Mining	103.9	103.9	103.9	104.1	105.2	104.8	.3	.0	.0	.2	1.1	-.4	3.5
Utilities	108.7	110.5	108.0	110.0	108.2	104.7	-3.4	1.6	-2.2	1.8	-1.6	-3.2	-4.2

Market Groups

Led by a drop of 6.0 percent in consumer durables, the production of consumer goods decreased 2.0 percent in August. Among consumer durables, the production of automotive products tumbled 10.7 percent after having posted gains in the previous three months. Output declines were also recorded in August in the other major categories of consumer durable goods: home electronics; appliances, furniture, and carpeting; and miscellaneous goods. The production of nondurable goods moved down 0.9 percent. The index for consumer energy products fell 2.8 percent because of lower output at utilities and at petroleum refineries. Non-energy consumer nondurable goods edged down 0.1 percent. The indexes for clothing and chemical products both moved lower. The output of foods and tobacco was unchanged, but the production of paper products moved up 0.3 percent.

The output of business equipment fell 0.6 percent in August after having increased in the previous three months. The output of transit equipment dropped 4.2 percent as a result of the large decrease in light vehicle assemblies and a smaller reduction in the output of civilian aircraft. The indexes for information processing equipment and for industrial and other equipment both posted small gains.

The output of defense and space equipment moved down 0.7 percent but was little changed, on net, from its level of 12 months earlier.

Among nonindustrial supplies, the production of construction supplies was off 1.0 percent after an increase of 0.4 percent in July. The index of business supplies moved down 0.6 percent in August for its fourth consecutive monthly decrease.

Materials output fell 0.9 percent. The production of energy materials was down 1.1 percent; excluding energy, the index for materials decreased 0.8 percent. The production of durable materials declined 1.2 percent. The index for consumer parts dropped 7.0 percent, largely because of sharp declines in the output of motor vehicle parts. The index for equipment parts edged down 0.1 percent. An increase in the index for semiconductors, printed circuit boards, and other equipment was more than offset by decreases elsewhere. The output of other durable materials fell 0.2 percent after no change in the previous two months. The production of nondurable materials moved down 0.2 percent. The index for textile materials rose but was 9.5 percent below its year-earlier level. The index for paper materials fell 0.7 percent, and the index for chemical materials decreased 0.2 percent.

Industry Groups

Manufacturing output fell 1.0 percent in August, and the factory operating rate moved down to 76.6 percent, a level about 3 percentage points below both its 1972-2007 average and its level of 12 months earlier. The production of durable goods industries decreased 1.6 percent. In addition to the drop in motor vehicles and parts, production declines occurred in the output of nonmetallic mineral products; electrical equipment, appliances, and components; aerospace and miscellaneous transportation equipment; and furniture and related products. However, the output of primary metals rose 0.4 percent after a sharp drop in the second quarter, and the indexes for wood products, machinery, and miscellaneous goods posted gains in August of between 0.3 percent and 0.9 percent. The production indexes for computer and electronic products and fabricated metal products were about unchanged. The production of nondurable goods fell 0.5 percent. Declines in the indexes for apparel and leather products, paper, petroleum and coal products, chemicals, and plastics and rubber products more than offset increases in the indexes for food, beverage, and tobacco products and for printing.

The index for other manufacturing (non-NAICS), which consists of publishing and logging, was down 0.2 percent in August.

The output of electric and gas utilities decreased 3.2 percent, and the operating rate for utilities dropped 2.9 percentage points, to 81.5 percent. Mining production moved down 0.4 percent, and the utilization rate fell to 91.3 percent but was 3.8 percentage points above its 1972-2007 average.

Capacity utilization rates at industries grouped by stage of process were as follows: For the crude stage, utilization declined 0.2 percentage point, to 89.6 percent, a rate 3.0 percentage points above its 1972-2007 average; for the primary and semifinished stages, utilization fell 1.3 percentage points, to 78.1 percent, a rate 4.1 percentage points below its long-run average; and for the finished stage, utilization moved down 1.0 percentage point, to 75.2 percent, a rate 2.5 percentage points below its long-run average.

Note: Capacity utilization rates for October 2007 through February 2008 have been updated with this release. In April 2008, a six-month reporting window was instituted for the industrial production indexes in the G.17 Statistical Release; however, the capacity utilization rates inadvertently continued to be calculated for only a four-month window. Table 7A shows the revised rates for the affected months. The data download program and the historical data files on the Federal Reserve Board's website have been updated with revised data.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity utilization in late March of 2009. The revised IP indexes will incorporate data from selected editions of the U.S. Census Bureau's 2007 Current Industrial Reports. Detailed data from the 2007 Economic Census, however, are not expected to be available. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2007 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 the methods for estimating the output of an industry will affect the index from 1972 to the present.

Capacity and capacity utilization will be revised to incorporate data from the Census Bureau's Quarterly 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 the revision 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 7A: Revised Capacity Utilization: Percent of capacity, seasonally adjusted
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