Industrial Production and Capacity Utilization - G.17

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Industrial production increased 0.6 percent in February after having declined 0.2 percent in January. In February, manufacturing output rose 0.8 percent and nearly reversed its decline of 0.9 percent in January, which resulted, in part, from extreme weather. The gain in factory production in February was the largest since last August. The output of utilities edged down 0.2 percent following a jump of 3.8 percent in January, and the production at mines moved up 0.3 percent. At 101.6 percent of its 2007 average, total industrial production in February was 2.8 percent above its level of a year earlier. The capacity utilization rate for total industry increased in February to 78.8 percent, a rate that is 1.3 percentage points below its long-run (1972–2013) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

In February, the production of consumer goods rose 0.8 percent and was 2.6 percent above its level of a year earlier. The indexes for consumer durables and consumer non-energy nondurables moved up 2.1 percent and 0.9 percent, respectively, in February, while the index for consumer energy products decreased 0.8 percent. Within consumer durables, the production of automotive products jumped 4.6 percent to reverse most of a similarly sized decrease in January, and the output of home electronics increased 0.7 percent. These gains in February were partly offset by a decrease of 1.7 percent in the production of appliances, furniture, and carpeting as well as a decline of 0.1 percent in the output of miscellaneous goods. Within consumer non-energy nondurables, the indexes for foods and tobacco, for chemical products, and for paper products each rose about 1 percent, while the output of clothing moved down 0.7 percent.

The production of business equipment rose 1.3 percent in February after having been little changed, on net, over the preceding four months. The indexes for transit equipment and for industrial and other equipment, which had been the principal contributors to the slower pace of business equipment growth in those months, increased 2.0 percent and 1.6 percent in February, respectively. Unlike the other major components of business equipment, information processing equipment posted a small decrease in February after having advanced somewhat from September to January. The output of business equipment in February was 2.8 percent above its year-earlier level.

The production of defense and space equipment increased 0.2 percent in February following a decline of 0.3 percent in January. The index for this market group was 2.6 percent above its level of 12 months earlier.

Among nonindustrial supplies, the output of construction supplies moved up 0.2 percent in February after having fallen in each of the previous two months. The index for construction supplies was 0.1 percent above its level of a year earlier; between February 2012 and February 2013, the index had increased 4.5 percent. The production of business supplies rose 0.7 percent in February, more than reversing its decline in January, and was 3.1 percent higher than its year-earlier level.

The production of materials to be processed further in the industrial sector rose 0.4 percent in February and stood 3.2 percent above its level of a year earlier. In February, gains were widespread among the components of materials. The output of durable materials moved up 0.4 percent; the production of consumer parts recorded a large increase, while the index for equipment parts also rose. The production of nondurable materials advanced 1.0 percent in February, retracing about half of its loss in January. Sizable increases in the indexes for paper materials and chemical materials in February more than offset a large decline in the index for textile materials. The output of energy materials edged up 0.1 percent and was 6.2 percent above its level of a year earlier.

Industry Groups

Manufacturing production recorded an increase of 0.8 percent in February after having decreased 0.9 percent in January. Much of the swing in the rates of change for production in January and February reflected the depressing effects on output of the severe weather in January and the subsequent return to more normal levels of production in February. The level of factory output in February was 1.5 percent above its year-earlier level. Capacity utilization for manufacturing moved up 0.5 percentage point in February to 76.4 percent, a rate 2.3 percentage points below its long-run average.

The production of durable goods rose 0.9 percent in February and was 2.7 percent above its year-earlier level. Large increases in February for several categories of durables more than offset large decreases in other categories. The biggest gain was in the output of motor vehicles and parts, which advanced 4.8 percent; the indexes for machinery and fabricated metal products each moved up around 1.5 percent. Smaller increases were recorded in the indexes for computer and electronic products, for aerospace and miscellaneous transportation equipment, and for miscellaneous goods. Production losses of about 1 percent or more were registered for wood products; nonmetallic mineral products; primary metals; electrical equipment, appliances, and components; and furniture and related products. Capacity utilization for durable goods manufacturing rose 0.5 percentage point to 76.6 percent, a rate 0.4 percentage point below its long-run average.

Nondurable manufacturing output rose 0.7 percent in February after having dropped 1.1 percent in January; production in February was 0.5 percent above its level of a year earlier. Increases of about 1 percent were recorded in the indexes for food, beverage, and tobacco products; paper; chemicals; and plastics and rubber products. Decreases of between 0.3 and 1.0 percent were recorded in the indexes for textile and product mills, for apparel and leather, for printing and support, and for petroleum and coal products. Capacity utilization for nondurable manufacturing moved up to 77.6 percent, a rate 3.1 percentage points below its long-run average.

The output of non-NAICS manufacturing industries (publishing and logging) increased 1.0 percent in February after having recorded declines of 1.0 percent or more in each of the previous four months.

Mining output moved up 0.3 percent in February to a level 6.1 percent higher than a year earlier. Capacity utilization at mines decreased 0.1 percentage point to 89.1 percent in February, but it remained 1.7 percentage points above its long-run average. Output at utilities edged down 0.2 percent but remained elevated because of the strong demand for heating due to the unusually cold weather. The operating rate for utilities declined 0.2 percentage point to 83.3 percent, a rate 2.7 percentage points below its long-run average.

Capacity utilization rates in February at industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.1 percentage point to 86.9 percent, a rate 0.6 percentage point above its long-run average; at the primary and semifinished stages, utilization moved up 0.1 percentage point to 77.8 percent, a rate 3.1 percentage points below its long-run average; and at the finished stage, utilization rose 0.8 percentage point to 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 plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity utilization at noon on March 28, 2014. The revised indexes for IP will incorporate data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2012. The update will also include revisions to the monthly indicators (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 2013 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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