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PrintIndustrial Production and Capacity Utilization - G.17
Annual Revision (400 KB PDF) (ASCII)
The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] Measured from fourth quarter to fourth quarter, total IP is now reported to have increased 0.7 percentage point less in 2011 than was previously published. The revisions to IP for other years were smaller: Compared to the previous estimates, industrial production fell slightly less in 2008 and 2009 and increased slightly less in 2010 and 2012. At 97.7 percent of its 2007 average, the index in the fourth quarter of 2012 now stands 0.4 percent below its previous estimate. With these revisions, IP is still estimated to have advanced about 6 percent in 2010, the first full year following the trough in June 2009 of the most recent recession, but it is now estimated to have risen about 3 percent both in 2011 and in 2012. Since the trough of the recession, total IP has reversed about 90 percent of its peak-to-trough decline.
The revised IP indexes incorporate detailed data on factory activity for 2011 and revised data for 2010 from the U.S. Census Bureau's Annual Survey of Manufactures (ASM). In addition, annual data from the U.S. Geological Survey (USGS) regarding metallic and nonmetallic minerals (except fuels) for 2012 were used in the revised estimates. The monthly estimates of production were updated to incorporate late-arriving or revised monthly or quarterly indicator data (either outputs from or inputs to production), and they also reflect recalculations of seasonal factors. In addition, new high-frequency indicators were incorporated for several production indexes.
Capacity utilization rates for recent years were revised down. The revisions show that the rate of capacity utilization for total industry was 0.8 percentage point lower in the fourth quarter of 2011 and 1.4 percentage points lower in the fourth quarter of 2012 than previously estimated; the decrease resulted both from an industrial production index that was lower than previously estimated and from a capacity index that increased more rapidly in 2011 and 2012 than previously estimated. Capacity utilization rates for the fourth quarters of 2009 and 2010 were little changed.
The revised estimates of capacity and capacity utilization incorporate data from the Census Bureau's Quarterly Survey of Plant Capacity Utilization (QSPC) for the fourth quarter of 2012, which covered the manufacturing sector, along with new data on capacity in the energy and mining sectors from the USGS, the U.S. Department of Energy, and other organizations, as well as data on capital spending by industry from the 2011 ASM.
RESULTS OF THE REVISION
The tables show the summary statistics for the annual revision. Tables 1A and 1B present the monthly, quarterly, and annual average index levels for total IP and for total capacity and utilization for January 1983 through February 2013, along with the percentage changes in total IP. Tables 2 through 4 show the revised rates of change in IP from 2008 through 2012 for market groups, industry groups, special aggregates, and selected detail. Table 5 presents the revised rates of change in capacity by industry groups for the 2009--13 period. Tables 2 through 5 also show the differences between the revised and previous estimates of the rates of change. Table 6 contains the revised capacity utilization rates for the final quarters of 2009 through 2012 and the differences between the revised and previous estimates. Table 7 reports revised semiannual rates of change for IP for 2008 through 2012. Table 8 contains revised capacity utilization rates for the second and fourth quarters of 2008 through 2012. Tables 9A, 9B, 10A, 10B, 11A, and 11B report the revised production, capacity, and utilization series for manufacturing, total industry excluding selected high-technology industries, and manufacturing excluding selected high-technology industries. Table 12 displays the annual proportions in IP by market and industry groups for 2005 through 2012. Table 13 reports revised IP indexes and capacity utilization rates for the major market and industry groups for the previous six months. Table 14 shows price indexes for data networking equipment for 2000 through 2012.
Industrial Production
Revisions to the changes in total IP in recent years show a somewhat slower rebound after the trough of the recent recession than previously reported (chart 1 and tables 2 and 7). The decline from late 2007 to June 2009 remains around 17 percent; the current estimate shows that about 15 percentage points of that decrease had been recovered by February 2013, whereas the previous estimates showed that about 16 percentage points had been recovered.[2]
Production by Industry Group
The recent recession was more pronounced in manufacturing than in mining and utilities, with factory output falling 20 percent from late 2007 to June 2009.[3] Through February 2013, manufacturing production had recovered about three-fourths of this decline. Factory output is now estimated to have moved up about 3 percent in both 2011 and 2012 after having advanced more than 6 percent in 2010. The revision reduced the gain for manufacturing production in 2011 by about 1 percentage point.
Output fell for all major manufacturing industries during the recession, but, as has historically been the case during recessions, the magnitude of the decline for durable goods industries was notably greater than that for nondurable goods industries. Even so, the production of durables has now fully reversed its decrease of 27 percent during the recession, with the index in February 2013 standing 0.4 percent above its pre-recession peak. In contrast, the output of nondurables declined by about 14 percent during the recession and is still about 9 percent below its pre-recession peak.
After having advanced 12.2 percent in 2010, the output of durable goods industries moved up 6.3 percent in 2011 and 5.4 percent in 2012 (table 2). The gains in 2011 and 2012 were about 1 percentage point and 1/2 percentage point slower than previously estimated, respectively; in contrast, the rates of change for 2008, 2009, and 2010 were each revised up by about 1/2 percentage point. The largest downward revisions in 2011 were in motor vehicles and parts, in aerospace and miscellaneous transportation equipment, and in miscellaneous manufacturing. The output of semiconductors is now reported to be stronger than previously estimated for 2007 through 2012. The stronger semiconductor index was the primary contributor to the upward revisions for overall durables for 2008 through 2010 but only partly offset downward revisions elsewhere in 2011 and 2012.
Although overall production for durables has reached its pre-recession level, the recovery has not been uniform across its major components. By February 2013, the indexes for machinery, for computer and electronic products, for motor vehicles and parts, and for miscellaneous manufacturing had all rebounded to above their late-2007 levels. In contrast, the latest readings for the indexes for wood products, for nonmetallic mineral products, and for furniture and related products were all more than 25 percent below their previous peaks.
After having increased 1.5 percent in 2010, the production of nondurable manufacturing industries moved up 0.5 percent in 2011 and 0.9 percent in 2012. The gains in 2010 and 2011 are now estimated to be about 1 percentage point slower than previously reported, whereas the increase in 2012 is little changed. The downward revisions in 2010 and 2011 were broadly distributed among nondurables industries, with only paper and printing showing improved growth rates from those previously reported. Among the major categories of nondurables, only the indexes for food, beverage, and tobacco products and for petroleum and coal products were near their pre-recession levels in February 2013; neither of these industries had shown much reduction in output during the recession. The post-recession recovery has been particularly subdued for textiles and product mills, for apparel and leather, and for printing and support; production in each remained at least 25 percent below the pre-recession peaks. Likewise, although output fell about 20 percent from its pre-recession peak for the paper industry, its production index in February 2013 was only up about 5 percent from the trough. Of the nondurable goods industries most affected by the recession, the plastics and rubber products industry has shown the most substantial recovery; it has reversed about 20 percentage points of its peak-to-trough decrease of 30 percent.
The output index for industries not in the scope of manufacturing under the North American Industry Classification System (NAICS) (that is, logging and publishing) fell each year from 2008 through 2012. The declines since 2009, however, are now reported to have been less steep.
The output indexes for mining and utilities were little changed from those previously reported. Strong increases in oil and natural gas extraction have boosted mining output in each of the last three years. After moving up in 2007 and into 2008, mining output fell from mid-2008 through the end of 2009 to about 10 percent below its previous peak. Mining output advanced substantially in 2010, 2011, and 2012; by February 2013, mining output was about 10 percent above its 2008 peak. The index for utilities rose 2.7 percent in 2010, fell back 2.3 percent in 2011, and was unchanged in 2012.
After increasing 27.2 percent in 2010, the output of high-technology industries---computers and peripheral equipment, communications equipment, and semiconductors and related electronic components---moved up 9.7 percent in 2011 and 2.3 percent in 2012 (table 3). These gains, as well as the rates of change from 2007 to 2010, were higher than the previous estimates. More-rapid advances in the production of microprocessors, which reflected greater improvements in chip quality than previously estimated, contributed importantly to the upward revisions in every year since 2007 (discussed under technical notes).
Among the other components of the selected high-technology group, the index for computers and peripherals is now estimated to have fallen between 15 and 20 percent in every year from 2009 to 2011. The decline in 2011 was substantially steeper than previously reported as a result of incorporating data from the 2011 ASM. In 2011, the output of communications equipment is now reported to have increased 11.6 percent; the index was previously reported to have decreased 1.0 percent. The level of the index in February 2013, however, ended up only about 3 percent higher than previously estimated, as a downward revision to the index in 2009 delayed the start of the recovery and growth was slower in 2010 and 2012.
Production by Market Group
The production index for final products and nonindustrial supplies rose about 3 3/4 percent in 2010 and about 2 1/2 percent in each of 2011 and 2012 (tables 2 and 7). Previously, the index was reported to have increased about 4 percent in 2010 and 2011; the gain in 2012 is little changed from its previous estimate. Since mid-2009, increases in this index have partially reversed the substantial losses during the recession: After having recorded a peak-to-trough decline of 17 percent, the index had recouped 11 percentage points of that loss by February 2013.
The production of consumer goods has rebounded slowly after the recession. The index edged up only 0.3 percent in 2010, but strengthened somewhat in 2011 and 2012, with gains of 2.0 percent and 1.3 percent, respectively. By February 2013, the index had reversed about one-half of its decrease of 14 percent during the recession. The improvements in both 2010 and 2011 are somewhat less than previously reported.
Downward revisions for consumer goods were concentrated in durables, but nonetheless the output of durable consumer goods advanced 7.9 percent in 2011 and 6.6 percent in 2012. By February 2013, the index for consumer durables had recouped 25 percentage points of its drop of 33 percent that occurred from mid-2007 to mid-2009. Gains in the indexes for automotive products---particularly in 2011---and for miscellaneous durables were the principal drivers of the rebound in consumer durables. By contrast, since the middle of 2009, the output of home electronics has fallen substantially, on net, and the production index for appliances, furniture, and carpeting has increased only modestly, with a gain of 3 percent in 2012 following increases of about 1 percent both in 2010 and in 2011.
The index for consumer nondurables was little changed by the revision. Over the course of 2010 to 2012, the production of consumer nondurables barely increased, on net, and, by February 2013, the index had recovered only about 2 1/2 percentage points of its 10 percent peak-to-trough decrease. The output of non-energy nondurables rose very slightly, on net, from 2010 through 2012. The output of foods and tobacco moved up each year, with a gain of 2.2 percent in 2012 following increases of 0.7 percent in each of 2010 and 2011. After having dropped substantially in 2008 and 2009, the output of clothing rose 11.4 percent in 2010, only to be followed by decreases of 8.0 percent in 2011 and 2.4 percent in 2012. Production of chemical products has fallen, on balance, since mid-2009, with a gain of 3 percent in 2011 sandwiched between losses of 3 percent in 2010 and 2012. Despite upward revisions for 2009 through 2012, the output of consumer paper products has fallen every year since 2005, with its drop of 8.6 percent in 2012 outpacing even its decreases in 2008 and 2009. The production of consumer energy products increased moderately in 2008, 2010, and 2012, but it decreased moderately in 2009 and 2011; the rates of change for the index in 2010 and 2011 were about 3/4 percentage point lower than previously reported.
Increases in the production of business equipment were somewhat lower in 2010 through 2012 than previously reported. Even so, the index has risen substantially since the 2009 trough, with gains of 12 percent, 5 percent, and 7 percent for 2010, 2011, and 2012, respectively. By February 2013, the indexes for all three major components of business equipment had increased to near their pre-recession peaks. Transit equipment, which reached its trough in late 2008 after a rapid drop of nearly 50 percent, has climbed to within 6 percent of its pre-recession peak, despite downward revisions to the index in 2011 and 2012. A gain of 7.8 percent in 2012 for information processing equipment followed increases of 1.4 percent in 2011 and 3.5 percent in 2010; the index was revised downward in 2010 and 2011 as a result of lower estimates for computer output. The index for information processing equipment fell 17 percent from peak to trough and had reversed 12 percentage points of that decline by February 2013. The production of industrial and other equipment is somewhat stronger than previously reported for 2010 and 2011. After having surged 16.4 percent in 2010, output rose 6.0 percent in 2011 and 4.5 percent in 2012. Despite having fallen 26 percent from early 2008 to mid-2009, the index for industrial and other equipment has essentially returned to its pre-recession level.
The production of defense and space equipment increased substantially in both 2010 and 2012; it fell slightly in both 2009 and 2011, and decreased more notably in 2008. Relative to the previous estimates, the rates of change for 2008, 2010, and particularly 2011 were lower, but the rates of change for 2009 and 2012 were higher.
Relative to the previous estimates, the output of construction supplies advanced more slowly in 2010 and 2011 but moved up more rapidly in 2012. With gains of 8.1 percent in 2010, 2.7 percent in 2011, and 4.4 percent in 2012, the index for construction supplies had reversed only 15 percentage points of its peak-to-trough drop of 35 percent by February 2013. Similarly, the index for business supplies has reversed less than one-half of its decline during the recession, though its peak-to-trough decrease of 16 percent was much less than that for construction supplies. Business supplies posted increases of 2.3 percent in 2010, 0.7 percent in 2011, and 1.6 percent in 2012; the gain in 2011 was lower than previously reported.
The index for materials was little changed by this revision. After decreases of 9.0 percent in 2008 and 4.4 percent in 2009, output advanced 9.4 percent in 2010, 4.3 percent in 2011, and 2.9 percent in 2012. The index for materials in February 2013 was 3 percent above its pre-recession level; it had fallen 17 percent from late 2007 to mid-2009.
In February 2013, the indexes for both durable goods materials and energy materials were above their pre-recession levels. The production of nondurable goods materials, by contrast, had recovered less than one-half of its drop-off during the recession and remained more than 10 percent below its 2007 peak. All of the categories of durable goods materials increased substantially over 2010 to 2012, with the largest gains coming in 2010. The index for durable goods materials was revised upward in each year from 2008 to 2012 and stood about 4 percent higher in February 2013 than was previously estimated. The faster rates of increase in each year were more than accounted for by upward revisions to the production of semiconductors. In contrast, among the components of nondurable materials, only chemical materials has recovered even one-half of its losses during the recession. Output for this group began increasing in early 2009 and rose about 5 percent in 2009 and 2010; it slipped 1.6 percent in 2011 and went back up 3.5 percent in 2012. The index for textile materials initially moved up after the recession, advancing 4.9 percent in 2010, but it fell off in both 2011 and 2012. The output of paper materials moved up 0.8 percent in 2010 but decreased by 1.3 percent in 2011 and 2.2 percent in 2012; its level in February 2013 was only slightly above its trough in 2009. Gains in oil and natural gas extraction have contributed to substantial increases for energy materials over the past three years; the index advanced 5.9 percent in 2010, 4.8 percent in 2011, and 2.6 percent in 2012. The decrease in energy materials output during the recession was relatively mild, and the index stood about 8 percent above its mid-2008 peak in February 2013.
Capacity
Total industrial capacity edged down in 2009, declined further in 2010, and then expanded in 2011 and 2012 (table 5). Capacity is expected to expand further in 2013. Relative to previous estimates, the decrease in total industrial capacity in 2009 is now shallower and the gains in 2011 and 2012 are somewhat larger.
Following declines in 2009 and 2010, manufacturing capacity began to expand in 2011, with a step-up in the pace of the gains in 2012. Manufacturing capacity is expected to increase further in 2013. Relative to earlier estimates, the rate of change for manufacturing capacity is higher in each year from 2009 to 2012, and is expected to be lower in 2013. As a result of the faster rates of change from 2009 to 2012, the revised level of capacity in the fourth quarter of 2012 is 1.6 percent higher than the earlier estimate. Capacity in durable manufacturing industries declined in 2009 and 2010 and then expanded by about 2 1/2 percent in 2011 and 2012, with a similarly sized gain expected in 2013. For nondurable manufacturing, capacity contracted in 2009 and 2010, declined a bit less steeply in 2011, and then rebounded modestly in 2012; a moderate expansion is also expected in 2013. Capacity in high-technology industries advanced in each year from 2009 to 2012, and it is expected to expand further in 2013; these advances, particularly in 2010 and 2011, are now reported to be substantially larger than previously estimated. Upward revisions to high-technology capacity more than accounted for the upward revisions to manufacturing capacity; excluding these industries, the level of manufacturing capacity at the end of 2012 was about the same as previously estimated.
Capacity at mines jumped in 2009, fell back slightly in 2010, and then expanded rapidly in 2011 and 2012; further gains are expected in 2013. Relative to previous estimates, the increases in 2011 and 2012 are now larger. Capacity at utilities increased in each year from 2009 to 2012, with another increase expected in 2013; these gains are now reported to be smaller, especially in 2010 and 2011, than stated previously.
By stage of processing, capacity in the crude stage increased in 2009, fell in 2010, and recorded solid gains in 2011 and 2012; capacity is expected to increase in 2013. Relative to previous estimates, capacity for the crude stage contracted more sharply in 2010 and expanded more rapidly in 2011 and 2012. Capacity at the primary and semifinished stage declined in 2009 and 2010 before recording moderate increases in 2011 and 2012; another modest expansion is expected in 2013. Relative to previous estimates, capacity at the primary and semifinished stage is now reported to have increased more rapidly, on average, for 2009 to 2012 but is now expected to expand somewhat less in 2013. For finished goods industries, capacity declined in 2009 and 2010, began to expand in 2011, and then increased more briskly in 2012. Capacity for producers of finished goods is expected to increase in 2013. The rates of change for capacity in the finished goods stage were similar to the previous estimates.
Capacity Utilization
In 2009, the rate of capacity utilization for total industry, at 69.7 percent, was 10.5 percentage points below its long-run (1972--2012) average of 80.2 percent (table 6).[4] Utilization rates rose rapidly through 2010, with further gains reported in 2011 and 2012. In 2012, capacity utilization for total industry was 77.5 percent, a rate 2.7 percentage points below its long-run average. Compared with earlier estimates, capacity utilization for total industry is now reported to have been lower in 2011 and 2012.
The capacity utilization rate for manufacturing rose briskly in 2010; smaller gains were recorded in 2011 and 2012. Relative to previous reports, the pace of capacity expansion is higher and rates of change for factory output are, on average, lower; consequently, the factory operating rate is now estimated to have been lower in 2011 and 2012. At 75.7 percent, the rate for 2012 was 1.5 percentage points below its earlier estimate and 3.0 percentage points below its long-run average. The utilization rate for durable manufacturing has risen in recent years, from 62.8 percent in 2009 to 75.5 percent in 2012, but the gains in 2011 and 2012 are now somewhat smaller than reported earlier. The utilization rate for nondurable manufacturing increased less steeply than that for durable manufacturing; it rose from 72.1 percent in 2009 to 77.2 percent in 2012. The rates for nondurables in 2010, 2011, and 2012 are now reported to have been lower than previously estimated.
As of 2012, most major manufacturing industry groups were still operating at rates below their industry-specific long-run averages. For nondurable manufacturing industries, each of the eight industry groups shown in table 6 was operating at a rate below its long-run average, with the rates for textile and product mills, for apparel and leather, for printing and support, and for plastics and rubber products well below their long-run averages. Among durable goods manufacturers, three of the eleven industry groups in table 6 were operating at utilization rates above their long-run averages: fabricated metal products, machinery, and miscellaneous manufacturing.
Capacity utilization in mining surged in 2010 and continued to increase in 2011; utilization fell back slightly in 2012 but remained high. The rates in 2011 and especially in 2012 are now lower than reported earlier. Nevertheless, the operating rate for mining in 2012 was 1.1 percentage points above its long-run average. The revised operating rates for utilities are higher than previously estimated for the 2010--12 period, but the rate at the end of 2012 was still 8.5 percentage points below its long-run average.
TECHNICAL ASPECTS OF THE REVISION
This revision incorporated new comprehensive data from the 2011 ASM and revised data from the 2010 ASM for production and value added by manufacturing industries. Revised price indexes from the Bureau of Economic Analysis (BEA) and updated price indexes constructed by the Federal Reserve for a few selected industries were also incorporated.[5] In addition, the updated production indexes include revisions to the measures of employment and production-worker hours from the Current Employment Statistics monthly survey conducted by the Bureau of Labor Statistics (BLS). The benchmark indexes for logging and publishing (included in the IP index for manufacturing but no longer included in manufacturing under NAICS) were updated through 2011 based on data from the U.S. Forest Service and the U.S. Census Bureau.
The revised IP indexes incorporated information from the QSPC for 2012 and from other industry reports. The indexes also incorporated revised monthly and quarterly source data on production, shipments, and inventories.
Annual Benchmark Output Indexes
As part of the annual revision, a benchmark output index---defined to be the nominal gross output divided by a price index---is constructed for each six-digit industry defined by the 2007 NAICS.
The benchmark indexes of production are measures of real gross output. The Census Bureau provides annual measures for value added and for the cost of materials, which can be summed to obtain nominal gross output.[6] The benchmark indexes for this revision incorporated new estimates of nominal gross output for 2011, as well as revisions to the 2010 estimates, from the ASM. The IP index is a Fisher index that aggregates the individual real gross output benchmarks using value-added weights. To obtain real gross output, the measures of nominal gross output are deflated by annual price deflators. The deflators for the IP benchmarks primarily reflect industry shipments deflators, most recently issued by the BEA in December 2012. The BEA deflators are available on a 2002 NAICS basis, so they needed to be converted to the 2007 NAICS structure before being applied to the detailed nominal gross output data.
Since 2003, the ASM has not included separate data for every six-digit manufacturing industry; data for some industries were included only as part of a larger group of industries. The 2007 Census, however, still contained separate data for each six-digit industry. For 2003 through 2006, the IP benchmark indexes were calculated by allocating the data from these combined industries to their six-digit components; the shares for each year were computed from a linear interpolation between the shares reported in the 2002 and the 2007 Economic Censuses. Data from the 2008, 2009, 2010, and 2011 ASMs were allocated to the component six-digit industries solely based on shares from the 2007 Economic Census.
Changes to annual benchmarks for semiconductors
The industrial production indexes for semiconductors use monthly shipments data from the Semiconductor Industry Association (SIA) deflated by a price index. This revision updates the methods for calculating the price index used in the output index for microprocessors (MPUs) (NAICS 334413, part). The updated methods also affect the price index for metal-oxide semiconductor (MOS) logic chips excluding MPUs (NAICS 334413, part).
As in the construction of other price indexes used in the G.17 statistics, the price index for MPUs is composed of an annual benchmark deflator combined with a monthly price indicator. Prior to this revision, both the annual benchmark deflator and the monthly deflator for MPUs came from the BLS's Producer Price Index (PPI) for MPUs. With this revision, the Federal Reserve incorporated new data for the annual benchmark deflator for MPUs but continued to use the PPI as the monthly price indicator.
The new MPU annual benchmark deflator covers the period beginning in 2007 and is developed using a hedonic regression. Hedonic price indexes use data on product characteristics to remove the effect on prices of changing product quality. The hedonic index includes prices for specific MPU models that were collected from published wholesale price lists from Intel Corporation. Information on the relative quality of the chips came from measures of MPU performance for specific representative tasks estimated by the System Performance Evaluation Corporation (SPEC), a non-profit corporation that publishes these measures as a service to the technology industry and user communities.
The hedonic model is a regression of the specific MPU prices on a constructed measure of performance derived from the SPEC measures along with other control variables and quarterly time indicator variables. Coefficients on the time indicators were used to construct a price index.[7] The new annual hedonic price index falls substantially more than the previously used annual price deflator derived from the PPI, and the result is a notable increase in MPU output beginning in 2007.
The price deflator for the industrial production index for MOS logic excluding MPUs is a geometric mean of a Fisher price index constructed from monthly SIA data for chips in this category, the price index for MPUs, and the price index for MOS memory chips. Because the changes to the price index for MPUs imply more-rapid price declines in recent years, the output index for MOS logic excluding MPUs, which relies on this price deflator, registered stronger gains.
Changes to annual benchmarks for communications equipment
Industrial production for communications equipment (NAICS 3342) is organized into six component indexes. For the years when detailed U.S. Census Bureau Current Industrial Reports (CIR) were available, the benchmark indexes for each of the six components used disaggregate product information to construct a measure of nominal output. With this revision, some product categories have been reassigned. Previously, nominal output of``other communications systems and equipment" had been assigned to the category for radio and TV broadcasting equipment, which was deflated by the relevant PPI; with this revision, these products were assigned to the wireless system equipment category, which is deflated by a price index developed by the Federal Reserve.
Changes to Individual Production Series
Several production indicators were affected by methodological changes in this revision. In particular, new indicators were found for some industries whose high-frequency movements had been based on data from the CIR, which were discontinued in mid-2011.
Soybean and other oilseed processing
With this revision, the IP index for soybean and other oilseed processing (NAICS 311222 and 311223) uses data on soybean and cottonseed products as the primary indicator of output. This revision incorporates monthly production data for soybean oil and for soybean meal from the National Oilseed Processors Association (NOPA) and monthly production data for cottonseed oil and cottonseed meal from the National Cottonseed Products Association (NCPA). For many years, the Federal Reserve used monthly information on soybean and cottonseed products from the CIR. With the 2012 annual revision, the industrial production index used production-worker hours to extend the CIR data. With this revision, the NOPA and the NCPA information will be used to extend the CIR data.
Brick and structural clay tile
The index for brick and structural clay tile (NAICS 327121) is based on monthly data on unit production of bricks from the Brick Industry Association (BIA). For the period through 2006, this index is based on quarterly production data from the CIR. With the 2012 annual revision, the industrial production index used production-worker hours to extend the CIR data beginning in mid-2011, but now the monthly BIA data are used for the period from 2007 to the present.
Speed changers, drives, gears, and power transmission
This revision incorporates monthly data on shipments of gears from the American Gear Manufacturers Association (AGMA) as a primary measure of output for the index for speed changers, drives, gears, and power transmissions (NAICS 333612 and 333613) for the period beginning with 2004. The AGMA data include information on coarse pitch and fine pitch gears, on worm/speed reducers and gearmotors, on concentric gearmotors, and on shaft-mounted speed reducers. Previously, the Federal Reserve estimated output for this index from production-worker hours.
Periodical publishers
The IP index for periodical publishers (NAICS 51112) has been updated with this revision. Previously, output was inferred from monthly production-worker hour data from the BLS. This revision incorporates quarterly data back to 2003 on total operating revenue for periodical publishers from the U.S. Census Bureau's Quarterly Services Survey.
Weights for Aggregation
The IP index is a Fisher index. The weights for manufacturing industries are derived from value-added measures from the Census of Manufactures and the ASM. The Federal Reserve derives estimates of value added for the electric and gas utility industries from annual revenue and expense data issued by other organizations. The weights for aggregation, expressed as value added per unit, were estimated with the latest data on producer prices for the period after 2011. Table 12 shows the annual value-added proportions in the IP index from 2005 through 2012.
Revised Quarterly and Monthly Data
This revision incorporates product data that became available or were revised after the regular six-month reporting window for monthly IP was closed. These data were released with too great of a lag to be included with monthly IP estimates but were available for inclusion in the annual revision.
Revised Seasonal Factors
Seasonal factors for production-worker hours---which adjust for timing, holiday, and monthly seasonal patterns---were updated with data through January 2013. The updated factors for the physical product series, which include adjustments for holiday and workday patterns, used data through December 2012 where available. Seasonal factors for unit motor vehicle assemblies have been updated, and projections through September 2013 are on the Board's website at www.federalreserve.gov/releases/g17/mvsf.htm.
The 2010 annual revision introduced a pre-adjustment to many seasonal factors to account for the effects of the recent recession. The current revision continued those pre-adjustments where necessary. A more detailed description of these methods will be included in a forthcoming Federal Reserve publication.
Data Availability and Publication Changes
Files containing the revised data and the text and tables from this release are available on the Board's website at www.federalreserve.gov/releases/g17, as are updated data for the annual revision and for all of the regularly issued series on industrial production, capacity, and capacity utilization.
A document with printed tables of the revised estimates of series shown in the G.17 release is available upon request to the Industrial Output Section, Mail Stop 82, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, DC 20551.
An expanded version of this release will be published in a forthcoming report that will be available on the Board's website.
[1] The revision affected rates of change for IP from 1972 forward. When necessary to maintain consistency with any revisions to the data for 1972 and subsequent years, the levels of the production and capacity indexes for the years before 1972 were multiplied by a constant. However, utilization rates and the rates of change in IP for the years before 1972 were not revised.
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[2] In this section, all the rates of change for a full year are calculated from the fourth quarter of the previous year to the fourth quarter of the reference year. Rates of change on a half-year basis are shown in table 7.
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[3] Manufacturing consists of those industries in the North American Industry Classification System definition of manufacturing, plus those industries---logging and newspaper, periodical, book, and directory publishing---that were in the manufacturing sector under the Standard Industrial Classification system.
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[4] Unless otherwise noted, rates of capacity utilization are reported for the fourth quarter of the reference year.
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[5] Price indexes for pharmaceuticals (NAICS 325412), semiconductors (NAICS 334413), and most components of communications equipment (NAICS 3342) were constructed by the Federal Reserve from alternative sources. Table 14 lists annual and quarterly price indexes for the networking equipment component of communications equipment.
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[6] Historically, the Census Bureau also provided measures of the cost of resales at the six-digit level and those were included in the nominal benchmark. In recent years, however, the cost of resales has not always been available, so, to maintain consistency, the benchmarks since 2003 have excluded the cost of resales.
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[7] Additional details on the construction of the price index can be found here.
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