Industrial Production and Capacity Utilization - G.17

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Industrial production fell 1.2 percent in August after having risen 0.5 percent in July. Hurricane Isaac restrained output in the Gulf Coast region at the end of August, reducing the rate of change in total industrial production by an estimated 0.3 percentage point. Manufacturing output decreased 0.7 percent in August after having risen 0.4 percent in both June and July. Precautionary shutdowns of oil and gas rigs in the Gulf of Mexico in advance of the hurricane contributed to a drop of 1.8 percent in the output of mines for August. The output of utilities declined 3.6 percent. At 96.8 percent of its 2007 average, total industrial production in August was 2.8 percent above its year-earlier level. Capacity utilization for total industry moved down 1.0 percentage point to 78.2 percent, a rate 2.1 percentage points below its long-run (1972--2011) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The production of consumer goods decreased 1.2 percent in August after having increased 0.4 percent in July. The output of durable consumer goods dropped 2.9 percent in August, while the output of consumer nondurables decreased 0.7 percent. Among durable consumer goods categories, the production of automotive products fell 4.7 percent; all of the other major categories posted smaller declines. Within nondurables, the production of non-energy goods moved down 0.2 percent. Clothing, chemical products, and paper products all contributed to the decrease, while the output of foods and tobacco was unchanged. The index for consumer energy products dropped 2.1 percent, a decrease driven by a fall in residential electricity sales.

The output of business equipment moved down 0.2 percent in August but was 11.4 percent above its year-earlier level. After having increased for seven consecutive months, the production of transit equipment declined 0.4 percent in August as a result of a decrease in motor vehicle assemblies. The output of information processing equipment moved down 0.3 percent, while the index for industrial and other equipment was unchanged.

The output of defense and space equipment moved up 0.5 percent in August; production had jumped 1.9 percent in July, as workers returned from a labor strike at a major military aircraft manufacturing facility. The level of the index in August was 3.8 percent above its year-earlier level.

Among nonindustrial supplies, the output of construction supplies edged down 0.1 percent in August, a fourth consecutive monthly decline. In addition, a decrease of 1.3 percent in the production of business supplies reversed the cumulative gain in the index over the previous four months.

The output of materials to be processed further in the industrial sector decreased 1.5 percent in August, with losses in all of its major components. The output of durable materials fell 1.1 percent. A drop of 3.4 percent in the index for consumer parts followed a jump of 4.4 percent in July; the largest contributors to this swing were categories related to motor vehicles. The output of equipment parts moved down 1.3 percent in August, a second consecutive large monthly decline. The production of nondurable materials decreased 0.3 percent. The indexes for textile materials and for chemical materials declined, while the production of paper materials moved up. The index for energy materials fell 2.7 percent, driven by decreases in oil and natural gas extraction.

Industry Groups

Manufacturing output decreased 0.7 percent in August, but it remained 3.8 percent above its year-earlier level. The factory operating rate moved down 0.7 percentage point in August to 77.0 percent, a level 1.8 percentage points below its long-run average.

The production index for durable goods decreased 1.1 percent in August. Declines were widespread among the major durable goods industries, with the largest drop coming in motor vehicles and parts. Only primary metals posted an increase. Capacity utilization for durable goods manufacturing was 77.3 percent, a rate 0.2 percentage point above its long-run average.

In August, the production of nondurables moved down 0.4 percent. The indexes for all major components of nondurables fell, and decreases of 1.0 percent or more were recorded in textile and product mills, in apparel and leather, and in plastics and rubber products. Capacity utilization for nondurable manufacturing moved down 0.3 percentage point to 77.9 percent, a rate 3.0 percentage points below its long-run average.

Production in the non-NAICS manufacturing industries (logging and publishing) was unchanged in August after having decreased in each of the previous five months.

In August, mining output retreated 1.8 percent, led by a significant decline in oil and gas extraction. Capacity utilization for mining moved down 1.8 percentage points to 88.6 percent, a rate 1.3 percentage points above its long-run average. The output of utilities dropped 3.6 percent after having increased 1.3 percent in July. The operating rate for utilities fell 2.9 percentage points in August to 73.3 percent, a rate 13.0 percentage points below its long-run average.

Capacity utilization rates in August for industries grouped by stage of process were as follows: At the crude stage, utilization dropped 1.4 percentage points to 86.3 percent, a rate matching its long-run average; at the primary and semifinished stages, utilization fell 1.1 percentage points to 75.4 percent, a rate 5.7 percentage points below its long-run average; and at the finished stage, utilization declined 0.8 percentage point to 77.7 percent, a rate 0.5 percentage point higher than its long-run average.

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 at the end of March 2013. The revised IP indexes will incorporate detailed data from the 2011 Annual Survey of Manufactures, conducted by the U.S. Census Bureau. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2011 will also be incorporated. The update will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series may be changed. Any modifications 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 through the fourth quarter of 2012 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 U.S. 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 2013 release schedule is also available on the website, and further information on the revision can be obtained from the Board's Industrial Output Section (telephone number 202-452-2570).

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