Industrial Production and Capacity Utilization - G.17

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Industrial production increased 0.7 percent in March after having advanced 1.2 percent in February. The rise in February was higher than previously reported primarily because of stronger gains for durable goods manufacturing and for mining. For the first quarter as a whole, industrial production moved up at an annual rate of 4.4 percent, just slightly slower than in the fourth quarter of 2013. In March, the output of manufacturing rose 0.5 percent, the output of utilities increased 1.0 percent, and the output of mines gained 1.5 percent. At 103.2 percent of its 2007 average, total industrial production in March was 3.8 percent above its level of a year earlier. Capacity utilization for total industry increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.

Industrial Production and Capacity Utilization: Summary

Market Groups

The production of consumer goods rose 0.7 percent in March, and it increased at an annual rate of 4.5 percent in the first quarter. The indexes for consumer durables and consumer non-energy nondurables both moved up around 1/4 percent in March, while the index for consumer energy products rose 2.5 percent. Within consumer durables, the output of appliances, furniture, and carpeting posted a gain of 2.0 percent, which partially reversed decreases in January and February. The output of miscellaneous consumer durables moved up 0.5 percent in March, but the indexes for automotive products and home electronics both fell modestly. Among consumer non-energy nondurables, the output of clothing jumped 3.3 percent and the output of chemical products rose 1.0 percent. The indexes for foods and tobacco and for paper products were little changed.

The output of business equipment gained 0.5 percent in March and moved up at an annual rate of 4.2 percent in the first quarter. The production of transit equipment rose 1.0 percent in March, and the production of information processing equipment advanced 1.2 percent, its largest increase since September 2013. The index for industrial and other equipment was unchanged in March, but it rose at an annual rate of 7.9 percent in the first quarter.

The production of defense and space equipment rose 0.7 percent in March after having moved up 0.9 percent in February. The index for this market group increased at an annual rate of 1.4 percent in the first quarter.

After having registered gains of 1.0 percent or more in February, the indexes for the two major categories of nonindustrial supplies posted slower increases in March. The output of construction supplies edged up 0.2 percent and moved up at an annual rate of 1.2 percent in the first quarter. The index for business supplies rose 0.6 percent in March, and it jumped 5.3 percent at an annual rate for the quarter.

The production of materials to be processed further in the industrial sector rose 0.9 percent in March and increased at an annual rate of 4.7 percent in the first quarter. Every major component of materials recorded gains in March. The output of durable materials moved up 0.3 percent. Within durable materials, the production of equipment parts increased 0.5 percent and the indexes for consumer parts and for other durable materials both moved up slightly. The production of nondurable materials advanced 0.6 percent. The largest increase among nondurable materials was in the index for textile materials, which jumped 4.5 percent. The output of energy materials gained 1.5 percent and has advanced 6.8 percent over the past 12 months.

Industry Groups

In March, manufacturing production recorded an increase of 0.5 percent; factory output rose 1.4 percent in February, 0.5 percentage point faster than previously reported. For the first quarter, the index for manufacturing increased at an annual rate of 1.7 percent, with similarly sized gains for durables and nondurables. The factory operating rate moved up 0.2 percentage point in March to 76.7 percent, a rate 2.0 percentage points below its long-run average.

The output of durable goods rose 0.4 percent; the two categories that registered the largest gains—about 2 1/2 percent—were wood products and nonmetallic mineral products. Increases of 1.0 percent or more were posted by computer and electronic products, by aerospace and miscellaneous transportation equipment, by furniture and related products, and by miscellaneous manufacturing. The largest declines were for primary metals and for motor vehicles and parts. The utilization rate for durable manufacturers edged up 0.1 percentage point to 76.3 percent, a rate 0.7 percentage point below its long-run average.

Nondurable manufacturing rose 0.7 percent in March; the index increased at an annual rate of 2.0 percent in the first quarter. With the exception of the index for food, beverage, and tobacco products, which declined 0.3 percent, all major nondurable manufacturing groups moved up in March. The indexes for apparel and leather goods, for petroleum and coal products, and for textile and product mills advanced 2.5 percent or more. The indexes for paper and printing each rose more than 1 percent. Although the operating rate for producers of nondurable goods moved up 0.4 percentage point to 78.5 percent, it was still 2.2 percentage points below its long-run average.

The output of non-NAICS manufacturing industries (publishing and logging) increased 0.5 percent in March after a gain of 2.1 percent in February. The utilization rate for this industry group rose 0.3 percentage point to 61.6 percent, a rate about 20 percentage points below its long-run average.

In March, mining output climbed 1.5 percent, its fifth consecutive monthly increase; over the past year, the index has risen 7.9 percent. The output of utilities rose 1.0 percent; unseasonably cold temperatures since the start of the year led to a jump in the index of 17.9 percent at an annual rate for the first quarter. The utilization rate for mining, 89.1 percent, was nearly 2 percentage points above its long-run average, while the operating rate for utilities, 85.0 percent, was about 1 percentage point below its long-run average.

Capacity utilization rates in March for industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.6 percentage point to 87.0 percent, a rate 0.7 percentage point above its long-run average; at the primary and semifinished stages, utilization moved up 0.5 percentage point to 78.1 percent, a rate 2.7 percentage points below its long-run average; at the finished stage, utilization rose 0.1 percentage point to 76.7 percent, a rate 0.4 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 28, 2014. The revised indexes for IP incorporated data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2012. The update also included 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 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 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.

The release for the 2014 annual revision is available on the Federal Reserve Board's website at www.federalreserve.gov/releases/G17.

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