Industrial Production and Capacity Utilization - G.17

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Industrial production rose 0.4 percent in September after having fallen 1.4 percent in August. For the third quarter as a whole, industrial production declined at an annual rate of 0.4 percent. Manufacturing output increased 0.2 percent in September but moved down at an annual rate of 0.9 percent in the third quarter. Production at mines advanced 0.9 percent in September, and the output of utilities moved up 1.5 percent. Roughly 0.3 percentage point of the decline in overall industrial production in August reflected the effect of precautionary idling of production in late August along the Gulf of Mexico in anticipation of Hurricane Isaac, and part of the rise in September is a result of the subsequent resumption of activity at idled facilities. At 97.0 percent of its 2007 average, total industrial production in September was 2.8 percent above its year-earlier level. Capacity utilization for total industry moved up 0.3 percentage point to 78.3 percent, a rate 2.0 percentage points below its long-run (1972--2011) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The production of consumer goods was unchanged in September after having fallen 1.5 percent in August. For the third quarter as a whole, output moved down at an annual rate of 0.8 percent, as a decline in durable goods more than offset an increase in nondurables. For September, the output of durable goods dropped 1.7 percent. Among durable consumer goods categories, the production of automotive products fell 2.9 percent, a second consecutive large decline. The indexes for home electronics and for miscellaneous goods posted smaller declines, and the index for appliances, furniture and carpeting moved up. The production of nondurables advanced 0.6 percent, with increases in the output of both energy products and non-energy goods. The index for consumer energy products rose 0.8 percent after having fallen 2.7 percent in August; within the non-energy category, where production increased 0.5 percent in September, there were gains in the indexes for foods and tobacco and for clothing, while the indexes for chemical products and for paper products declined.

The output of business equipment moved up 0.8 percent in September and was nearly 11 percent above its year-earlier level. In the third quarter, the production of business equipment advanced at an annual rate of 4.6 percent, appreciably slower than its gain of 12.1 percent in the second quarter. The production of transit equipment rose 1.7 percent in September after having dropped 3.3 percent in August; the gain in September was boosted by an increase in the production of civilian aircraft. The output of information processing equipment moved up 0.5 percent, while the index for industrial and other equipment increased 0.4 percent.

The output of defense and space equipment gained 1.7 percent in September. For the third quarter, the index rose at an annual rate of 7.0 percent, which more than reversed a decline of 5.7 percent in the second quarter.

Among nonindustrial supplies, the output of construction supplies moved up 1.3 percent in September, but it decreased at an annual rate of 3.5 percent in the third quarter for its second consecutive quarterly decline. The production of business supplies rose 0.4 percent in September after having fallen 1.3 percent in August; the index moved down at an annual rate of 1.7 percent in the third quarter.

The output of materials to be processed further in the industrial sector rose 0.4 percent in September after having declined 1.6 percent in August. The index for materials moved down at an annual rate of 0.9 percent in the third quarter; decreases in durable materials and in energy materials more than offset an increase in nondurable materials. The output of durable materials edged down 0.1 percent in September. Consumer parts fell noticeably for a second month; nevertheless, in September, the index stood 16.5 percent above its year-earlier level. The output of equipment parts moved up 0.4 percent in September after having declined 2 percent or more in July and in August. In September, the production of nondurable materials advanced 0.6 percent. The indexes for textiles and for chemicals increased, while the production of paper moved down. The output of energy materials rose 0.9 percent following a large drop in August that was driven by decreases in oil and natural gas extraction related to Hurricane Isaac.

Industry Groups

Manufacturing output edged up 0.2 percent in September; it fell 0.9 percent in August. The index for manufacturing moved down at an annual rate of 0.9 percent in the third quarter, its first quarterly decline since the second quarter of 2009. The factory operating rate was unchanged in September at 76.8 percent, a rate 2.0 percentage points below its long-run average.

The production of durable goods edged up 0.1 percent in September. Gains of 1 percent or more were registered in the indexes for aerospace and miscellaneous transportation equipment and for electrical equipment, appliances, and components, but the output of motor vehicles and parts and of primary metals fell back. Capacity utilization for durable goods manufacturing was 76.8 percent, a rate 0.3 percentage point below its long-run average. The production of durable goods declined for the third quarter as a whole at an annual rate of 1.0 percent after having advanced solidly in the first half of the year. Among major durable goods categories, decreases in the third quarter were widespread.

The production of nondurables moved up 0.3 percent in September. The index was unchanged in the third quarter and fell at an annual rate of 3.1 percent in the second quarter. For September, decreases in the output of printing, of petroleum and coal products, and of plastics and rubber products were more than offset by increases in most of the other major categories. Capacity utilization for nondurable manufacturing was 78.1 percent, a rate 2.8 percentage points below its long-run average.

Production in the non-NAICS manufacturing industries (logging and publishing) edged down 0.1 percent in September. This index fell at an annual rate of 10.0 percent in the third quarter after having registered a comparably sized decline in the second quarter.

In September, mining output increased 0.9 percent after having fallen 1.6 percent in August, when nearly all the oil and gas extraction capacity in the Gulf of Mexico was idled late in the month in anticipation of Hurricane Isaac. Capacity utilization for mining moved up 0.7 percentage point in September to 89.1 percent, a rate 1.8 percentage points above its long-run average. The output of utilities advanced 1.5 percent in September; it decreased 4.3 percent in August. The operating rate for utilities rose 0.9 percentage point in September to 74.8 percent, a rate 11.5 percentage points below its long-run average.

Capacity utilization rates in September for industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.4 percentage point to 86.6 percent, a rate 0.3 percentage point above its long-run average; at the primary and semifinished stages, utilization rose 0.3 percentage point to 75.6 percent, a rate 5.5 percentage points below its long-run average; and at the finished stage, utilization moved up 0.1 percentage point to 77.5 percent, a rate 0.3 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.

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