Industrial Production and Capacity Utilization - G.17

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Industrial production increased 0.9 percent in January after decreasing 0.7 percent in December. A storm late in the month likely held down production in January by a small amount. The index for utilities jumped 5.4 percent; demand for heating moved up markedly after having been suppressed by unseasonably warm weather in December. Manufacturing output increased 0.5 percent in January and was 1.2 percent above its year-earlier level. Mining production was unchanged following four months with declines that averaged about 1 1/2 percent per month. At 106.8 percent of its 2012 average, total industrial production in January was 0.7 percent below its year-earlier level. Capacity utilization for the industrial sector increased 0.7 percentage point in January to 77.1 percent, a rate that is 2.9 percentage points below its long-run (1972–2015) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The indexes for consumer goods, business supplies, and materials all rose nearly 1 percent or more in January; the rise in utilities output contributed significantly to the gains in each of these sectors. The major market groups unaffected by the jump in utilities recorded mixed results. The production of consumer durables rose 1.2 percent, while the output of consumer non-energy nondurables increased 0.8 percent. The production of business equipment gained 0.3 percent, with increases for transit equipment and for industrial and other equipment. The indexes for construction supplies and general business supplies each declined 0.3 percent or less, and the production of defense and space equipment decreased 0.7 percent. The indexes for durable and nondurable materials each rose about 1/2 percent; almost all of their major components posted increases.

Industry Groups

Manufacturing output rose 0.5 percent in January, with increases of about 1/2 percent both for nondurables and durables and a small decrease for other manufacturing (publishing and logging). Within nondurables, the largest gains, about 1 percent, were posted by food, beverage, and tobacco products and by chemicals, while the largest decreases, about 2 percent, were recorded by apparel and leather and by printing and support. Results for the major durable goods industries were spread between a drop of 1.3 percent for electrical equipment, appliances, and components and a gain of 2.8 percent for motor vehicles and parts. Within mining, substantial decreases for oil and gas well drilling and servicing, for coal mining, and for nonmetallic mineral mining were offset by increases for oil and gas extraction and for metal ore mining.

Capacity utilization for manufacturing increased 0.3 percentage point in January to 76.1 percent, a rate that is 2.4 percentage points below its long-run average. The operating rates for durables and nondurables each rose 0.3 percentage point, while the utilization rate for other manufacturing (publishing and logging) fell 0.1 percentage point. The operating rate for mining moved up about 1/2 percentage point, and the rate for utilities rose nearly 4 percentage points; the rates for both sectors were nearly 9 percentage points below their long-run averages.

The data in this release include preliminary estimates of industrial capacity for 2016. Measured from fourth quarter to fourth quarter, total industrial capacity is projected to rise 0.5 percent this year after increasing 1.5 percent in 2015. Manufacturing capacity is expected to advance 1.1 percent in 2016, about the same pace as in 2015. Capacity in the mining sector is estimated to fall 3.2 percent in 2016 after rising 4.2 percent in 2015. Capacity at electric and natural gas utilities is projected to increase 0.8 percent for a second consecutive year.

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 around the end of the first quarter of 2016. New annual benchmark data for 2014 for manufacturing will be incorporated, as well as other annual data, including information on the mining of metallic and nonmetallic minerals (except fuels). The updated IP indexes will include revisions to monthly indicators (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 2015 from the U.S. Census Bureau's Quarterly Survey of Plant Capacity 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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