Industrial Production and Capacity Utilization - G.17

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Industrial production decreased 0.6 percent in April 2014 after having risen about 1 percent in both February and March. In April, manufacturing output fell 0.4 percent. The index had increased substantially in February and March following a decrease in January; severe weather had restrained production early in the quarter. The output of utilities dropped 5.3 percent in April, as demand for heating returned toward normal levels. The production at mines increased 1.4 percent following a gain of 2.0 percent in March. At 102.7 percent of its 2007 average, total industrial production in April was 3.5 percent above its level of a year earlier. The capacity utilization rate for total industry decreased 0.7 percentage point in April to 78.6 percent, a rate that is 1.5 percentage points below its long-run (1972–2013) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The production of consumer goods fell 1.3 percent in April but was 2.5 percent above its year-earlier level because of sizable gains during the previous two quarters. The index for consumer durables was unchanged in April, while the index for consumer non-energy nondurables moved down 0.3 percent and the index for consumer energy products fell 5.5 percent. Among consumer durables, a small decline in the production of automotive products was offset by gains in the indexes for home electronics; appliances, furniture, and carpeting; and miscellaneous goods. Within consumer non-energy nondurables, the indexes for chemical products and for paper products each declined about 1 percent while the indexes for foods and tobacco and for clothing were little changed. The decrease registered in consumer energy products was the result of a large drop in the distribution by utilities of electricity and gas to residences.

After having posted substantial increases in both February and March, the output of business equipment moved down 0.5 percent in April. Decreases in the indexes for information processing equipment and for industrial and other equipment were partially offset by an increase in the index for transit equipment. The output of business equipment has moved up 4.1 percent over the past 12 months, with similarly sized gains in each of its three major components.

The production of defense and space equipment moved up 0.6 percent in April for its third consecutive monthly increase. The gains during the past few months primarily reflected increases for military aircraft and for ship building and repairing. In April, the index for defense and space equipment was 3.6 percent above its level of a year earlier.

Among nonindustrial supplies, the output of construction supplies was unchanged in April following gains of 0.9 percent and 0.7 percent in February and March, respectively. The index in April was 3.5 percent above its level 12 months earlier. After having increased in the previous two months, the production of business supplies moved down 0.7 percent in April; even so, it was 2.4 percent above its year-earlier level.

The index for materials to be processed further in the industrial sector moved down 0.3 percent in April; nevertheless, it was 4.1 percent above its level of a year earlier. The production of durable materials fell 0.6 percent in April; all of the major components of durables posted declines of between 0.5 and 0.7 percent. The index for nondurable materials moved down 0.2 percent. Among the major categories of nondurables, both textile and paper materials recorded losses, while chemical materials posted a small gain. After having increased 2.0 percent in March, the output of energy materials was unchanged in April; the index has advanced 6.2 percent from its year-earlier level.

Industry Groups

Manufacturing production moved down 0.4 percent in April after having increased in the previous two months; the index was 2.9 percent above its level of a year earlier. The factory operating rate moved down 0.5 percentage point in April to 76.4 percent, a rate 2.3 percentage points below its long-run average.

The production of durable goods decreased 0.3 percent in April but was 4.3 percent above its year-earlier level. Within this industry group, the largest declines for April, between 1.2 and 1.6 percent, were in the indexes for primary metals, for machinery, and for furniture and related products; the largest gain, 1.3 percent, was recorded by aerospace and miscellaneous transportation equipment. Capacity utilization for durable goods manufacturing declined 0.5 percentage point to 76.1 percent, a rate 0.9 percentage point below its long-run average.

Nondurable manufacturing output moved down 0.4 percent in April after having gained 0.7 percent in March; the index was 1.7 percent above its level of a year earlier. Decreases in April were widespread among the major components of nondurables; losses of 1.0 percent or more were recorded by petroleum and coal products and by plastics and rubber products. Capacity utilization for nondurable manufacturing moved down 0.4 percentage point to 78.2 percent, a rate 2.5 percentage points below its long-run average.

The output of non-NAICS manufacturing industries (publishing and logging) decreased 1.0 percent in April and was 1.6 percent below its level of a year earlier.

After having increased 2.0 percent in March, mining output moved up 1.4 percent in April, boosted by gains in oil and gas extraction, in coal mining, and in support activities for mining; the index for mining was 8.3 percent above its year-earlier level. Capacity utilization at mines increased to 89.7 percent, a rate 2.4 percentage points above its long-run average. The index for utilities dropped 5.3 percent, but the level was nearly unchanged from 12 months earlier. The operating rate for utilities fell to 80.1 percent, a rate 6.0 percentage points below its long-run average.

Capacity utilization rates in April for industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.6 percentage point to 87.5 percent, a rate 1.2 percentage points above its long-run average; at the primary and semifinished stages, utilization fell 1.4 percentage points to 76.8 percent, a rate 4.0 percentage points below its long-run average; and at the finished stage, utilization decreased 0.5 percentage point to 76.5 percent, a rate 0.6 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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