Industrial Production and Capacity Utilization - G.17

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Industrial production decreased 0.3 percent in April for its fifth consecutive monthly loss. Manufacturing output was unchanged in April after recording an upwardly revised gain of 0.3 percent in March. In April, the index for mining moved down 0.8 percent, its fourth consecutive monthly decrease; a sharp fall in oil and gas well drilling has more than accounted for the overall decline in mining this year. The output of utilities fell 1.3 percent in April. At 105.2 percent of its 2007 average, total industrial production in April was 1.9 percent above its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in April to 78.2 percent, a rate that is 1.9 percentage points below its long-run (1972–2014) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

Construction supplies and business supplies were the only major market groups to post production gains for April, with increases of 0.1 percent and 0.3 percent, respectively. The index for consumer goods declined 0.3 percent; decreases both for consumer energy products and for non-energy nondurables more than offset an increase for consumer durables. The production of business equipment moved down 0.4 percent, as a small gain in information processing equipment was outweighed by cutbacks in transit equipment and in industrial and other equipment. The output of defense and space equipment declined 0.3 percent. The index for materials decreased 0.2 percent as a result of a reduction of 0.5 percent in energy materials.

Industry Groups

Manufacturing output was unchanged in April, as a small increase in the production of durables was offset by a small decrease in the output of nondurables. Among durable goods industries, gains of more than 1 percent were posted by wood products; nonmetallic mineral products; electrical equipment, appliances, and components; and motor vehicles and parts. Machinery production fell 0.9 percent for the largest decrease within durables. The changes in output among nondurable goods industries were relatively smaller: Production by the food, beverage, and tobacco product industry contracted 0.6 percent for the largest decrease, while the biggest gain was registered by the index for printing and support activity, which increased 0.4 percent. The production of other manufacturing industries (publishing and logging) fell 0.4 percent.

The capacity utilization rate for manufacturing in April decreased 0.1 percentage point to 77.2 percent, a rate 1.4 percentage points below its long-run average. The operating rates for durable goods manufacturing and nondurable goods manufacturing each decreased 0.1 percentage point to rates about 3/4 percentage point below their respective long-run averages. Utilization for other manufacturing (publishing and logging) decreased 0.2 percentage point to 58.6 percent, a rate more than 20 percentage points below its long-run average. Capacity utilization for mines dropped 0.9 percentage point to 84.0 percent, a rate 3.3 percentage points below its long-run average, while the operating rate for utilities declined 1.0 percentage point to 78.8 percent.

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 on July 21, 2015. New annual benchmark data for 2012 and 2013 for manufacturing will be incorporated, as well as other annual data, including information on the mining of metallic and nonmetallic minerals (except fuels). The weights for market-group splits of the indexes will be updated with information from the 2007 benchmark input-output accounts from the Bureau of Economic Analysis. The updated IP indexes will include revisions to the monthly indicator (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 2014 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 U.S. Department of Energy, and other organizations.

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