Industrial Production and Capacity Utilization - G.17

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Industrial production decreased 0.3 percent in January following a 0.6 percent increase in December. In January, manufacturing output moved up 0.2 percent, and mining output jumped 2.8 percent. The index for utilities fell 5.7 percent, largely because unseasonably warm weather reduced the demand for heating. At 104.6 percent of its 2012 average, total industrial production in January was at about the same level as it was a year earlier. Capacity utilization for the industrial sector fell 0.3 percentage point in January to 75.3 percent, a rate that is 4.6 percentage points below its long-run (1972–2016) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

In January, most of the major non-energy market groups recorded increases, but the drop in the output of utilities contributed substantially to losses in the overall indexes for consumer goods, business supplies, and materials through their energy components. The decrease of 0.8 percent for overall consumer goods reflected both a drop in consumer energy products and a decline in consumer durables. The decline for consumer durables resulted primarily from a loss of 2.8 percent for its largest major category, automotive products. The index for consumer non-energy nondurables rose 0.3 percent by virtue of an increase in the foods and tobacco product group. The output of business equipment edged up, as gains in information processing equipment and in industrial and other equipment offset a decline in transit equipment. The index for defense and space equipment remained unchanged from its level in December. The output of construction supplies advanced 0.9 percent, while the index for non-energy business supplies gained 0.3 percent. The production of non-energy materials moved up 0.5 percent, with improvement in both durable and nondurable materials.

Industry Groups

The index for manufacturing output rose 0.2 percent in January. Although the output of motor vehicles and parts decreased 2.9 percent, production elsewhere in manufacturing moved up 0.5 percent. The production of durables edged down, but most of its components other than motor vehicles and parts recorded gains; machinery manufacturing registered the biggest advance. The index for nondurables rose 0.6 percent, as increases of 1 percent or more were posted by textile and product mills, by petroleum and coal products, and by chemicals. The output of other manufacturing (publishing and logging) fell 0.7 percent.

The output of mining jumped 2.8 percent in January after declining in December, with most mining industries posting increases. The mining index in January was 0.4 percent higher than its year-earlier level.

Capacity utilization for manufacturing moved up 0.1 percentage point in January to 75.1 percent, a rate that is 3.3 percentage points below its long-run average. The operating rate for durables, at 76.2 percent, is 0.7 percentage point below its long-run average; the rates for nondurables and for other manufacturing (publishing and logging), at 75.0 percent and 59.9 percent, respectively, remain substantially below their long-run averages (about 80 percent for each). Utilization for mining moved up 2.0 percentage points, to 79.1 percent, but the rate for utilities fell 4.6 percentage points, to 75.1 percent. Capacity utilization rates for both mining and utilities are well below their long-run averages.

The data in this release include preliminary estimates of industrial capacity for 2017. Measured from fourth quarter to fourth quarter, total industrial capacity is projected to rise 1.3 percent this year after increasing 0.4 percent in 2016. Manufacturing capacity is expected to advance 1.1 percent in 2017, somewhat faster than the 0.7 percent pace in 2016. Capacity in the mining sector is estimated to rise 0.9 percent in 2017 after falling 3.4 percent in 2016. Capacity at electric and natural gas utilities is projected to increase 0.8 percent, about the same rate as in the three previous years.

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 March 31, 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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