Industrial Production and Capacity Utilization - G.17

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Industrial production decreased 0.5 percent in February after increasing 0.8 percent in January. Sizable declines in the indexes for both utilities and mining in February outweighed a gain of 0.2 percent for manufacturing. The output of utilities dropped 4.0 percent, as unseasonably warm weather curbed the demand for heating. Mining production fell 1.4 percent and has decreased nearly 1.3 percent per month, on average, over the past six months. At 106.3 percent of its 2012 average, total industrial production in February was 1.0 percent below its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in February to 76.7 percent, a rate that is 3.3 percentage points below its long-run (1972–2015) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The drop in utilities output for February contributed substantially to declines in the indexes for consumer goods, business supplies, and materials through their energy components. The market groups unaffected by the drop in utilities recorded mixed results. The production of consumer durables rose 0.3 percent; the output of consumer non-energy nondurables decreased 0.5 percent after jumping 1.1 percent in January. In February, the production of business equipment advanced 0.6 percent, with a decrease for transit equipment but sizable increases for information processing equipment and for industrial and other equipment. The indexes for construction supplies, for defense and space equipment, and for general business supplies (non-energy) each rose 0.5 percent or less. The output of durable materials moved up 0.2 percent; the output of nondurable materials moved down a similar amount, primarily because of a drop of 1.5 percent for textiles and a decrease of 0.3 percent for chemicals.

Industry Groups

Manufacturing output rose 0.2 percent in February, as an increase of 0.4 percent for durable manufacturing more than offset a decrease of 0.1 percent for nondurable manufacturing; the output of other manufacturing (publishing and logging) was unchanged. The indexes for most major durable goods industries either advanced or were little changed: Machinery, primary metals, and miscellaneous manufacturing registered the largest gains, nearly 1 percent each, while wood products recorded the only notable decrease, 1.2 percent. Within nondurables, decreases for food, beverage, and tobacco products; for textile and product mills; and for chemicals slightly outweighed gains of 2 1/2 percent or more for apparel and leather manufacturing and for petroleum and coal products, as well as smaller increases for other industries.

The large drop in mining in February resulted from decreases in crude oil extraction, coal mining, and oil and gas well drilling and servicing. Since late 2014, the index for oil and gas well drilling and servicing has fallen more than 60 percent.

Capacity utilization for manufacturing was unchanged in February at 76.1 percent, a rate that is 2.4 percentage points below its long-run average. The operating rate for durables edged up, while the rate for nondurables edged down; the utilization rate for other manufacturing (publishing and logging) was unchanged. The operating rate for mining moved down 1.0 percentage point, and the rate for utilities dropped more than 3 percentage points; the rates for both sectors were below their long-run averages by nearly 10 percentage points or more.

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 April 1, 2016, at 12:00 noon EDT. 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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