Industrial Production and Capacity Utilization - G.17

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Industrial production rose 0.6 percent in May after having declined 0.3 percent in April. The decrease in April was previously reported to have been 0.6 percent. Manufacturing output increased 0.6 percent in May after having moved down 0.1 percent in the previous month. In May, the output of mines gained 1.3 percent and the production of utilities decreased 0.8 percent. At 103.7 percent of its 2007 average, total industrial production in May was 4.3 percent above its level of a year earlier. The capacity utilization rate for total industry increased 0.2 percentage point in May to 79.1 percent, a rate that is 1.0 percentage point below its long-run (1972–2013) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

In May, the production of consumer goods edged up 0.1 percent to a level that is 3.1 percent higher than a year earlier. The index for consumer durables increased 0.9 percent, while the indexes for consumer non-energy nondurables and consumer energy products decreased 0.2 percent and 0.1 percent, respectively. All of the major components of consumer durables posted gains, with the largest advance—1.5 percent—registered by automotive products. Among consumer non-energy nondurables, declines in the indexes for foods and tobacco, for clothing, and for paper products were partially offset by a gain in the index for chemical products. Within consumer energy products, a decline in the index for residential utilities slightly more than offset an increase in the output of fuels.

The production of business equipment rose 0.8 percent in May, its fourth consecutive monthly increase. All of the major components of business equipment recorded gains; the largest pickup—1.1 percent—was posted by industrial and other equipment. Over the past 12 months, the index for business equipment has advanced 5.3 percent.

The production of defense and space equipment moved down 0.3 percent in May after having been unchanged in April. The index for this market group in May was 2.6 percent above its level of a year earlier.

The indexes for both major categories of nonindustrial supplies rose in May after having decreased in April. In May, the output of construction supplies increased 0.8 percent and was 4.4 percent above its level of 12 months earlier. The production of business supplies edged up 0.1 percent and was 2.6 percent above its year-earlier level.

The index for materials to be processed further in the industrial sector moved up 0.9 percent in May, its fifth consecutive monthly increase; the index was 5.1 percent above its level of a year earlier. The major categories of materials all posted gains in May. The output of durable materials advanced 1.0 percent, with solid gains in all of its major components. The output of nondurable materials moved up 0.6 percent, as a gain in the index for chemical materials more than offset declines in the indexes for textile materials and paper materials. The output of energy materials rose 1.1 percent; it has advanced 7.1 percent in the past 12 months.

Industry Groups

Manufacturing production increased 0.6 percent in May after having edged down 0.1 percent in April; previously, factory output was reported to have declined 0.4 percent in April. In May, the index was 3.6 percent above its level of a year earlier but 1.3 percent below its peak in December 2007. The factory operating rate moved up 0.3 percentage point in May to 77.0 percent, its highest level since March 2008 but still 1.7 percentage points below its long-run average.

The production of durable goods rose 0.9 percent in May to a level 5.3 percent higher than a year earlier. Gains were widespread within this industry group: With the exception of primary metals, which edged down 0.1 percent, all of the major durable goods industries recorded gains of 0.6 percent or more. Capacity utilization for durable goods manufacturing increased 0.4 percentage point to 76.8 percent, a rate only 0.2 percentage point below its long-run average and 1.3 percentage points above its level of a year earlier.

Nondurable manufacturing output increased 0.4 percent in May after having moved down 0.2 percent in April; the index in May was 2.2 percent above its level of a year earlier. Sizable gains in the indexes for petroleum and coal products, for chemicals, and for plastics and rubber products more than outweighed the losses in all of the other major components of nondurables. Capacity utilization for nondurable manufacturing moved up 0.2 percentage point to 78.6 percent, a rate 2.1 percentage points below its long-run average but 0.8 percentage point above its level of a year earlier.

After having moved up 0.4 percent in April, the output of non-NAICS manufacturing industries (publishing and logging) decreased 0.8 percent in May to a level that was 2.2 percent lower than a year earlier.

Mining output advanced 1.3 percent in May following gains of more than 1 1/2 percent in each of the previous two months. Increases were widespread within mining, including oil and gas extraction, coal mining, and drilling and related activities. The index for mining was 9.7 percent above its year-earlier level. Capacity utilization at mines increased 0.8 percentage point in May to 91.0 percent, a rate 3.7 percentage points above its long-run average. The output of utilities moved down 0.8 percent, its fourth consecutive decline. The operating rate for utilities fell 0.8 percentage point to 79.1 percent, a rate 7.0 percentage points below its long-run average.

Capacity utilization rates in May for industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.7 percentage point to 88.7 percent, a rate 2.4 percentage points above its long-run average; at the primary and semifinished stages, utilization edged up 0.1 percentage point to 77.1 percent, a rate 3.7 percentage points below its long-run average; and at the finished stage, utilization also edged up 0.1 percentage point, to 76.8 percent, a rate 0.3 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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