INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[Annual Revision Notice Below]

Industrial production fell 2.0 percent in December, and declines were again widespread. Output was revised up in October, but it was revised down in November; for the fourth quarter as a whole, total industrial production decreased 11.5 percent at an annual rate. At 103.6 percent of its 2002 average, output in December was 7.8 percent below its year-earlier level. In December, manufacturing production dropped 2.3 percent. The output of mines moved down 1.6 percent, and the output of electric and gas utilities was little changed. Capacity utilization for total industry fell to 73.6 percent in December, a level 7.4 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						Dec. '07 to Dec. '08
	July[r]	Aug.[r]	Sept.[r]	Oct.[r]	Nov.[r]	Dec.[p]	July[r]	Aug.[r]	Sept.[r]	Oct.[r]	Nov.[r]	Dec.[p]
Total index	111.2	109.8	105.2	107.1	105.7	103.6	.0	-1.3	-4.2	1.8	-1.3	-2.0	-7.8
Previous estimates	111.3	109.8	105.2	106.8	106.1		.0	-1.3	-4.1	1.5	-.6
Major market groups
Final Products	112.2	110.5	107.4	108.6	108.4	107.3	-.3	-1.6	-2.7	1.1	-.2	-1.0	-5.4
Consumer goods	106.1	103.8	102.3	104.6	103.6	101.8	-.1	-2.1	-1.5	2.3	-1.0	-1.7	-5.2
Business equipment	129.8	129.3	119.9	116.8	120.2	122.4	-.4	-.4	-7.3	-2.6	2.9	1.8	-6.7
Nonindustrial supplies	105.9	105.0	102.4	102.7	100.2	97.7	.1	-.8	-2.5	.4	-2.5	-2.5	-9.2
Construction	102.0	101.0	98.7	97.3	92.8	89.7	.7	-.9	-2.2	-1.4	-4.6	-3.4	-14.0
Materials	112.2	110.9	104.2	107.3	105.2	102.3	.1	-1.2	-6.0	3.0	-2.0	-2.8	-9.6
Major industry groups
Manufacturing (see note below)	111.9	110.8	106.4	107.4	105.0	102.5	-.2	-1.0	-3.9	.9	-2.2	-2.3	-9.9
Previous estimates	111.9	110.8	106.3	107.0	105.5		-.1	-1.1	-4.0	.6	-1.4
Mining	105.8	105.2	95.2	102.3	104.5	102.9	1.5	-.5	-9.5	7.4	2.2	-1.6	-1.0
Utilities	108.9	103.9	105.5	107.8	108.8	108.7	-1.0	-4.6	1.6	2.1	1.0	-.1	.4

Market Groups

The production of consumer goods declined 1.7 percent in December and contracted at an annual rate of 2.8 percent in the fourth quarter. In December, the production of consumer durables tumbled 4.7 percent, and the index for nondurables moved down 1.0 percent. Among durables, the production of automotive products fell 7.0 percent. Output also dropped in all the other major categories of consumer durable goods: home electronics; appliances, furniture, and carpeting; and miscellaneous goods. The production of nondurable non-energy consumer goods fell 1.5 percent in December, its first decrease since August. The indexes for foods and tobacco, clothing, paper products, and chemical products all moved lower. After a drop in November, the index for consumer energy goods edged up 0.2 percent in December.

Although the index for business equipment moved up 1.8 percent in December, it fell at an annual rate of more than 19 percent in the fourth quarter. The output of commercial aircraft, which surged in December to a bit above its pre-strike level, provided a boost to transit equipment. However, for the fourth quarter as a whole, the production of transit equipment plunged 33.1 percent at an annual rate primarily because of cuts in motor vehicle production and the strike in commercial aircraft. In December, the output of information processing equipment declined for a sixth consecutive month, dropping 1.5 percent, and the production of industrial and other equipment fell for a fourth month to an index 9.8 percent below its year-earlier reading.

The output of defense and space equipment declined 0.7 percent and was 3.5 percent below its level 12 months earlier.

Among nonindustrial supplies, the production of construction supplies moved down 3.4 percent. Over the 12 months ending in December, this index declined 14 percent, its third consecutive annual decline. The output of business supplies fell 2.1 percent in December and was more than 7 percent below its year-earlier level.

Materials output fell 2.8 percent and was down 14.4 percent at an annual rate in the fourth quarter. After two months of gains, the production of energy materials decreased 0.6 percent in December. The production of durable materials fell for the fifth consecutive month, down 4.7 percent. The index for consumer parts decreased 5.7 percent, in large part because of declines in the output of motor vehicle parts. The index for equipment parts dropped 4.0 percent, and the output of other durable materials fell 5.0 percent. The production of nondurable materials decreased 3.4 percent; the indexes for textile, paper, and chemical materials all moved lower.

Industry Groups

Manufacturing output fell 2.3 percent in December to a level almost 10 percent below that of 12 months earlier. For the fourth quarter as a whole, manufacturing output contracted at an annual rate of more than 16 percent. In December, the factory operating rate moved down 1.7 percentage points, to 70.2 percent, a level 9.5 percentage points below its 1972 to 2007 average. The production of durable goods industries declined 2.6 percent in December. Output fell in every major category of durable goods with the exception of aerospace and miscellaneous transportation equipment. The jump in this index reflected the further recovery of output from the strike in commercial aircraft. The production of nondurable goods moved down 2.1 percent, and declines were recorded in all the major nondurable goods indexes.

The index for the other manufacturing category, which consists of publishing and logging, decreased 2.1 percent in December and was down 5.0 percent at an annual rate in the fourth quarter.

The output of electric and gas utilities was little changed in December, and the operating rate moved down 0.3 percentage point to 84.0 percent, a rate 2.8 percentage points below its 1972-2007 average. Mining output declined 1.6 percent in December but rose for the quarter as a whole. The utilization rate in mining fell 1.5 percentage points, to 89.3 percent, a rate 1.8 percentage points above its 1972-2007 average.

Capacity utilization rates in December at industries grouped by stage of process were as follows: At the crude stage, utilization decreased 1.8 percentage points to 83.9 percent, a rate 2.7 percentage points below its 1972-2007 average; at the primary and semifinished stages, utilization moved down 2.0 percentage points, to 72.1 percent, a rate more than 10 percentage points below its long-run average; and at the finished stage, utilization declined 1.0 percentage point, to 71.4 percent, a rate 6.3 percentage points below its long-run average.

Revision of Industrial Production and Capacity Utilization