Industrial Production and Capacity Utilization - G.17

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Industrial production increased 0.3 percent in June but fell at an annual rate of 1.4 percent for the second quarter of 2015. In June, manufacturing output was unchanged: The output of motor vehicles and parts fell 3.7 percent, but production elsewhere in manufacturing rose 0.3 percent. The indexes for mining and utilities advanced 1.0 percent and 1.5 percent, respectively. At 105.7 percent of its 2007 average, total industrial production in June was 1.5 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.2 percentage point in June to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

While the production indexes for consumer goods and for construction supplies were little changed in June, the indexes for the other major market groups each rose about 1/2 percent. Within consumer goods, a decline of 3.8 percent in the output of automotive products was offset by increases for other durable goods and for consumer energy products; the decrease for automotive products came after three months of sizable gains. The increase of 0.4 percent for business equipment reflected advances for information processing equipment and for industrial and other equipment; the output of transit equipment declined. Among the categories of industrial materials, the indexes for both nondurable materials and energy materials rose, while the output of durable materials was unchanged.

Industry Groups

Manufacturing output was unchanged in June and increased at an annual rate of 1.4 percent in the second quarter of 2015. In June, the output of nondurables posted a small increase. Within nondurables, chemicals and products posted the largest advance, 0.7 percent, while all of the other major industries registered gains or losses of less than 1/2 percent. The output of durables edged down. Among durable goods industries, the indexes for motor vehicles and parts and for wood products dropped substantially, while the indexes for computer and electronic products, for furniture and related products, and for miscellaneous manufacturing each rose substantially. The indexes for other durable goods industries were little changed. The output of other manufacturing industries (publishing and logging) fell nearly 1 percent. The index for mining advanced 1.0 percent as a result of an increase in crude oil extraction. The index for oil and gas well drilling and servicing fell for the seventh consecutive month, although the decrease, about 3 percent, was its smallest since December; the index in June was nearly 50 percent below its November level. Coal production fell sharply in June, its third consecutive monthly decline. For the second quarter of 2015, mining output dropped at an annual rate of 5.7 percent. The output of utilities increased 1.5 percent in June but fell 13.5 percent at an annual rate in the second quarter of 2015.

The capacity utilization rate for manufacturing edged down 0.1 percentage point in June to 77.2 percent, a rate 1.4 percentage points below its long-run average. The operating rate for durable goods factories declined 0.3 percentage point to 76.5 percent, and the operating rate for nondurable goods manufacturing edged up 0.1 percentage point to 79.6 percent. The utilization rates in each sector remained below their long-run averages, though by 1 percentage point or less. The capacity utilization rate for other manufacturing (publishing and logging) decreased 0.4 percentage point to 57.2 percent, a rate 24.0 percentage points below its long-run average. The utilization rate for mines moved up 0.7 percentage point to 84.1 percent, while the rate for utilities increased 1.2 percentage points to 80.7 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, at 10:00 a.m. EDT. The classification system for the industry groups will be advanced to the 2012 version of the North American Industry Classification System, and the comparison base year will be advanced to 2012. 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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