Industrial Production and Capacity Utilization - G.17

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Industrial production was unchanged in October after decreasing 0.2 percent in September. Although the level of industrial production in September was the same as the previous estimate, revisions to the index for utilities raised the rate of change in total industrial production in August and lowered it in September. In October, manufacturing output increased 0.2 percent, and mining posted a gain of 2.1 percent for its largest increase since March 2014. The index for utilities dropped 2.6 percent, as warmer-than-normal temperatures reduced the demand for heating. At 104.3 percent of its 2012 average, total industrial production in October was 0.9 percent lower than its year-earlier level. Capacity utilization for the industrial sector edged down 0.1 percentage point in October to 75.3 percent, a rate that is 4.7 percentage points below its long-run (1972–2015) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The output of consumer goods decreased 0.2 percent in October. The production of consumer durables advanced 0.5 percent, with nearly all of its major components recording increases. Automotive products posted a gain for the fifth consecutive month, and the index was about 7 1/2 percent above its year-earlier level. The index for consumer non-energy nondurables was unchanged from its September level, with a gain for chemical products offset by losses for other components; the output of consumer energy products fell 3.0 percent. Business equipment registered a rise of 0.2 percent as a result of an increase for information processing equipment; the indexes for transit equipment and for industrial and other equipment edged down. The output of defense and space equipment decreased 0.3 percent. Construction supplies recorded an increase of 0.6 percent, while business supplies recorded a loss of 0.4 percent. The production of materials moved up 0.2 percent, as a broadly based gain in durable materials outweighed a decline for energy materials; the index for nondurable materials was unchanged.

Industry Groups

Manufacturing output increased 0.2 percent in October but was 0.2 percent below its level of a year earlier. In October, the production of durables rose 0.4 percent, the production of nondurables remained unchanged, and the production of other manufacturing (publishing and logging) fell 0.6 percent. Most durable goods industries posted increases; the only declines were registered by aerospace and miscellaneous transportation equipment and by miscellaneous manufacturing. No major nondurable goods industry recorded a sharp swing in output: Chemicals posted the largest gain, 0.4 percent, while paper registered the largest decrease, 0.8 percent.

The index for mining advanced 2.1 percent in October. Declines in the extraction of crude oil and natural gas were outweighed by gains for most other mining industries, particularly coal mining.

Capacity utilization for manufacturing edged up 0.1 percentage point in October to 74.9 percent, a rate that is 3.6 percentage points below its long-run average. The operating rate for durables rose to 76.2 percent, the rate for nondurables remained unchanged at 74.3 percent, and the rate for other manufacturing (publishing and logging) fell to 61.7 percent. Utilization for mining jumped 1.8 percentage points to 77.0 percent; even so, it remains more than 10 percentage points below its long-run average. The rate for utilities fell 2.1 percentage points to 77.8 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 around the end of the first quarter of 2017. New annual benchmark data for 2015 for manufacturing will be incorporated, as will other annual data, including information on the mining of metallic and nonmetallic minerals (except fuels). 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 2016 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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