Industrial Production and Capacity Utilization - G.17

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Industrial production edged down 0.1 percent in January after having risen 0.4 percent in December. In January, manufacturing output decreased 0.4 percent following upwardly revised gains of 1.1 percent in December and 1.7 percent in November. For the fourth quarter as a whole, manufacturing production is now estimated to have advanced 1.9 percent at an annual rate; previously, the increase was reported to have been 0.2 percent. In January, the output of utilities rose 3.5 percent, as demand for heating was boosted by temperatures that fell closer to their seasonal norms; the production at mines declined 1.0 percent. At 98.6 percent of its 2007 average, total industrial production in January was 2.1 percent above its level of a year earlier. The capacity utilization rate for total industry decreased in January to 79.1 percent, a rate that is 1.1 percentage points below its long-run (1972--2012) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The production of consumer goods declined 0.2 percent in January following an increase of 0.4 percent in December. In January, the index for consumer durables decreased 2.0 percent, but the index for consumer nondurables rose 0.4 percent. Among durable consumer goods categories, the production of automotive products dropped 3.9 percent and the output of home electronics fell 1.3 percent; these losses were partly offset by an increase of 2.0 percent for appliances, furniture, and carpeting and a small gain for miscellaneous goods. A weather-related jump of 3.1 percent in the output of consumer energy products boosted the index for consumer nondurables; the output of non-energy goods declined 0.5 percent, with decreases in all of its major components except clothing.

The output of business equipment edged up 0.1 percent in January and was 6.9 percent above its year-earlier level. The small gain in January was supported by an increase of 0.4 percent in the industrial and other equipment category; the indexes for transit equipment and information processing equipment each fell 0.3 percent. All three of the major components of business equipment have moved up over the past 12 months, but the advance of 16.0 percent for transit equipment substantially exceeded the gains of around 4 percent for the other categories.

The production of defense and space equipment increased 0.4 percent in January following a decrease of 0.5 percent in December; the index was up 4.2 percent over the past 12 months.

Among nonindustrial supplies, the output of construction supplies declined 0.1 percent in January following gains of 1.0 percent in December and 2.5 percent in November. In January, the output of construction supplies was 2.1 percent above its level of a year earlier. The production of business supplies rose 0.6 percent in January after having decreased 0.2 percent in December. In January, the indexes for both categories of nonindustrial supplies remained well below their pre-recession peaks.

The production of materials to be processed further in the industrial sector moved down 0.2 percent in January after having risen 0.5 percent in December. In January, the output of durable materials slipped 0.2 percent; the indexes for equipment parts and consumer parts both increased slightly, but the index for other durable materials fell 0.6 percent. The production of nondurable materials declined 0.7 percent; a gain of 1.8 percent in the output of textiles was outweighed by losses in the indexes for paper and chemicals. The output of energy materials was unchanged.

Industry Groups

Manufacturing output decreased 0.4 percent in January after having risen 1.1 percent in December; the level of output in January was 1.7 percent above its year-earlier level but was 5.3 percent below its pre-recession peak in December 2007. Capacity utilization for manufacturing moved down 0.4 percentage point in January to 77.6 percent, a rate 1.2 percentage points below its long-run average.

The production of durable goods moved down 0.5 percent in January, with decreases recorded in many major categories of durables. The largest declines were in the output of motor vehicles and parts, which dropped 3.2 percent, and in the output of primary metals, which fell 2.6 percent; each of those indexes had advanced strongly in both November and December. Smaller losses were reported in January for the indexes for wood products; nonmetallic mineral products; computer and electronic products; electrical equipment, appliances, and components; and miscellaneous manufacturing. Gains were recorded in the indexes for fabricated metal products, for machinery, for aerospace and miscellaneous transportation equipment, and for furniture and related products. Capacity utilization for durable goods manufacturing declined 0.6 percentage point to 77.7 percent, a rate 0.6 percentage point above its long-run average.

Nondurable manufacturing output declined 0.3 percent in January after having advanced 1.1 percent in December. In January, drops in the indexes for food, beverage, and tobacco products; paper; and chemicals more than outweighed gains in all of the other major nondurables groups. Capacity utilization for nondurable manufacturing edged down to 78.8 percent, a rate 2.0 percentage points below its long-run average. The output of non-NAICS manufacturing industries (publishing and logging) decreased 0.3 percent.

In January, mining output fell 1.0 percent, its first decline since August 2012, and capacity utilization at mines decreased to 90.8 percent, a rate 3.4 percentage points above its long-run average. At electric and natural gas utilities, output increased 3.5 percent in January after having fallen 4.5 percent in December; the operating rate rose to 74.8 percent in January.

Capacity utilization rates in January at industries grouped by stage of process were as follows: At the crude stage, utilization fell 1.1 percentage points to 88.5 percent, a rate 2.2 percentage points above its long-run average; at the primary and semifinished stages, utilization increased 0.4 percentage point to 76.4 percent, a rate 4.6 percentage points below its long-run average; and at the finished stage, utilization decreased 0.6 percentage point to 77.8 percent, a rate 0.6 percentage point above its long-run average.

The data in this release include preliminary estimates of industrial capacity for 2013. Measured fourth quarter to fourth quarter, total industrial capacity is projected to rise 2.1 percent this year after having increased 1.5 percent in 2012. Manufacturing capacity is also estimated to advance 2.1 percent in 2013 after having gained 1.4 percent in 2012. Mining capacity is estimated to rise 3.1 percent in 2013 after having moved up 2.2 percent in 2012, and capacity at electric and natural gas utilities is projected to expand 1.2 percent this year after having increased 2.4 percent last year. These estimates will be updated with the publication on March 22, 2013, of the annual revision to industrial production, capacity, and capacity utilization.

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 on March 22, 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 2012 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 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.

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