Industrial Production and Capacity Utilization - G.17

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Industrial production rose 0.4 percent in March after having increased 1.1 percent in February. For the first quarter as a whole, output moved up at an annual rate of 5.0 percent, its largest gain since the first quarter of 2012. Manufacturing output edged down 0.1 percent in March after having risen 0.9 percent in February; the index advanced at an annual rate of 5.3 percent in the first quarter. Production at mines decreased 0.2 percent in March and edged down in the first quarter. In March, the output of utilities jumped 5.3 percent, as unusually cold weather drove up heating demand. At 99.5 percent of its 2007 average, total industrial production in March was 3.5 percent above its year-earlier level. The rate of capacity utilization for total industry moved up in March to 78.5 percent, a rate that is 1.2 percentage points above its level of a year earlier but 1.7 percentage points below its long-run (1972--2012) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The production of consumer goods advanced 1.1 percent in March. For the first quarter, the output of consumer goods moved up at an annual rate of 6.2 percent, its largest quarterly increase since the end of 1999. In March, the production of durable consumer goods rose 0.8 percent, primarily as a result of a large increase in the output of automotive products. The index for home electronics also rose, but the indexes for appliances, furniture, and carpeting and for miscellaneous goods declined. The output of consumer durables jumped at an annual rate of 12.0 percent in the first quarter following a gain of 9.3 percent in the fourth quarter of 2012. The production of nondurable consumer goods advanced 1.2 percent in March because of strength in consumer energy products. The index for non-energy nondurable consumer goods was unchanged, as an increase in the index for chemical products was offset by decreases in the indexes for foods and tobacco, for clothing, and for paper products. For the first quarter, the output of consumer nondurables rose at an annual rate of 4.6 percent.

The production of business equipment edged up 0.1 percent in March after having risen 1.9 percent in February; the index increased at an annual rate of 3.8 percent in the first quarter. In March, a large gain in the output of transit equipment and a small rise in the output of industrial and other equipment were mostly offset by a reduction in the output of information processing equipment. For the first quarter, however, transit equipment recorded its first decrease since the initial quarter of 2011, while the other two categories of business equipment posted solid gains.

The index for defense and space equipment decreased 0.2 percent in March after having been unchanged in February. The output of this category fell 5.5 percent at an annual rate in the first quarter.

Among nonindustrial supplies, the production of construction supplies fell back 1.3 percent in March following four months of solid gains; the output for this market group advanced at an annual rate of 15.0 percent in the first quarter following a gain of 7.2 percent in the previous quarter. Although the index has recovered considerably since its trough in December 2009, the output of construction supplies in March stood nearly 20 percent below its levels during 2007 prior to the recession. The index for business supplies moved up 0.6 percent in March and rose at an annual rate of 4.6 percent in the first quarter.

The output of materials to be processed further in the industrial sector rose 0.2 percent in March because of an increase of 1.3 percent in the output of energy materials; the index for non-energy materials declined 0.4 percent, with losses in almost all of its major categories. The index for durable materials was down 0.7 percent in March, its first decrease since September 2012, but output in the first quarter increased at an annual rate of 6.6 percent. The indexes for each of the three major categories of durable materials decreased in March but posted solid gains for the first quarter. The output of nondurable materials edged down 0.1 percent in March, as declines in paper and chemical materials outweighed strength in textile materials and other nondurable materials. For the first quarter, however, the production of nondurable materials rose at an annual rate of 4.1 percent with improvements in all of its major components. The output of energy materials gained 1.3 percent in March after having risen 1.0 percent in February; the index posted its eighth consecutive quarterly increase in the first quarter.

Industry Groups

Factory output edged down 0.1 percent in March but increased at an annual rate of 5.3 percent in the first quarter. Capacity utilization for manufacturing in March moved down 0.2 percentage point to 76.4 percent, a rate that is 12.4 percentage points above its trough in June 2009 but still 2.3 percentage points below its long-run average.

Within manufacturing, the output of durable goods declined 0.2 percent in March after having risen 1.6 percent in February. Among durables, small to moderate losses were widespread in March, and decreases of more than 1 percent were observed in the indexes for primary metals and for electrical equipment, appliances, and components. These losses were mostly offset, however, by a large gain in the output of motor vehicles and parts and a smaller gain in the output of machinery. For the first quarter, durable goods manufacturing advanced at an annual rate of 6.5 percent, with increases in nearly every major category. In March, capacity utilization for durable manufacturing decreased 0.3 percentage point to 76.4 percent, a rate that is 18.0 percentage points above its 2009 low and 0.6 percentage point below its long-run average.

The production of nondurable goods was unchanged in March after having edged up in both January and February. In March, increases in the indexes for textile and product mills, for printing and support, and for chemicals were offset by decreases for the other categories of nondurable goods, with the largest losses recorded by paper and by apparel and leather products. In the first quarter of 2013, the production of nondurable goods moved up at an annual rate of 4.7 percent for its strongest gain since the first quarter of 2005. In March, the operating rate at producers of nondurables edged down 0.1 percentage point to 77.8 percent; though it was 8.5 percentage points above its 2009 low, it was 2.9 percentage points below its long-run average.

Production in the non-NAICS manufacturing industries (logging and publishing) declined 0.6 percent in March and fell at an annual rate of 2.8 percent in the first quarter.

Production at mines contracted 0.2 percent in March after having risen 0.9 percent in February; the index edged down at an annual rate of 0.2 percent in the first quarter. Capacity utilization in mining declined 0.4 percentage point to 87.5 percent in March and was 0.2 percentage point above its long-run average. With increases in January, February, and March, the output of utilities advanced at an annual rate of 10.5 percent in the first quarter. The operating rate for utilities in March rose 4.2 percentage points to 82.9 percent but was 3.3 percentage points below its long-run average.

Capacity utilization rates in March at industries grouped by stage of process were as follows: At the crude stage, utilization declined 0.4 percentage point to 86.2 percent, a rate 0.1 percentage point below its long-run average; at the primary and semifinished stages, utilization rose 0.6 percentage point to 77.5 percent, a rate 3.5 percentage points below its long-run average; and at the finished stage, utilization was unchanged at 76.2 percent, a rate 0.9 percentage point below its long-run average.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board issued 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 incorporated 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 were also incorporated. The update included revisions to the monthly indicator and to seasonal factors for each industry. In addition, the estimation methods for some series have changed. Modifications to the methods for estimating the output of an industry affected the index from 1972 to the present.

Capacity and capacity utilization were 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.

The revision is available on the Board's website at www.federalreserve.gov/releases/G17.

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