FRB: G.17 Release-- Industrial Production and Capacity Utilization --December 16, 1998

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[1998 Revision Notice Below]

Industrial production declined 0.3 percent in November after an upward-revised increase of 0.2 percent in October. The decline in the index resulted from a fall of 3.4 percent in the output of utilities and of 1.2 percent in the output of mines. Manufacturing output was unchanged after having risen 0.6 percent in October. At 131.8 percent of its 1992 average, industrial production in November was 1.5 percent higher than it was in November 1997. Capacity utilization fell 0.6 percentage point, to 80.6 percent, a level 1-1/2 percentage points below its 1967-97 average.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY Seasonally adjusted | Index, 1992=100 | Percent change | 1998 | 1998 | Nov. 97 to Industrial Production | Aug. Sept. Oct. Nov. | Aug. Sept. Oct. Nov. | Nov. 98 ------------------------------------------------------------------------------------------------------------------------ | | | Total index | 132.4 131.9 132.2 131.8 | 1.4 -.4 .2 -.3 | 1.5 Previous estimates | 132.5 132.0 132.0 | 1.6 -.4 .0 | | | | Major market groups: | | | Products, total | 124.9 124.2 124.8 124.4 | 1.3 -.6 .5 -.3 | 1.8

Consumer goods | 116.1 114.8 115.3 115.4 | 1.9 -1.1 .4 .1 | -.5

Business equipment | 166.6 167.2 168.7 167.7 | 1.9 .4 .9 -.6 | 7.9

Construction supplies | 128.0 126.7 128.1 129.0 | -.3 -1.0 1.1 .7 | 4.4 Materials | 144.4 144.4 144.1 143.7 | 1.7 .0 -.2 -.3 | .9 | | | Major industry groups: | | | Manufacturing | 135.7 135.2 136.0 135.9 | 1.6 -.4 .6 .0 | 2.0

Durable | 159.8 159.5 160.7 160.4 | 3.5 -.2 .8 -.2 | 4.7

Nondurable | 111.3 110.6 111.0 111.2 | -.8 -.6 .4 .2 | -1.3 Mining | 103.7 102.7 101.9 100.7 | -.9 -1.0 -.8 -1.2 | -4.1 Utilities | 120.2 120.5 116.1 112.2 | 1.6 .2 -3.7 -3.4 | -1.2 ------------------------------------------------------------------------------------------------------------------------ | | Capacity | Percent of Capacity | Growth | Average 1982 1988-89 1997 | 1998 | Nov. 97 to Capacity Utilization | 1967-97 Low High Nov. | Aug. Sept. Oct. Nov. | Nov. 98 ------------------------------------------------------------------------------------------------------------------------ | | | Total industry | 82.1 71.1 85.4 83.4 | 82.0 81.3 81.2 80.6 | 5.0 Previous estimates | | 82.0 81.4 81.1 | | | | Manufacturing | 81.1 69.0 85.7 82.6 | 80.7 80.1 80.2 79.8 | 5.6

Advanced processing | 80.5 70.4 84.2 81.6 | 79.9 79.5 79.6 79.3 | 6.6

Primary processing | 82.3 66.2 88.9 85.4 | 83.1 82.0 82.1 81.7 | 3.0 Mining | 87.5 80.3 88.0 87.9 | 86.3 85.4 84.7 83.5 | .9 Utilities | 87.3 75.9 92.6 90.3 | 95.1 95.2 91.6 88.5 | .7 ------------------------------------------------------------------------------------------------------------------------ Note: Estimates for November are preliminary. Estimates from August to October are revised.

Market Groups

The output of consumer goods edged up 0.1 percent after an upward-revised increase of 0.4 percent in October. Among consumer durables, production of automotive products decreased, but remained near the high level in October; the decline was offset, however, by a 0.7 percent increase in the production of other consumer durables, mainly computers and appliances. The output of nondurable consumer goods other than energy products, which rose 0.3 percent, was led by a second month of strong gains in the production of foods and consumer chemicals. The output of consumer energy products fell 1.2 percent, a drop that reflected the lowering of residential demand for electricity and gas that came from the abnormally warm weather during the month.

The production of business equipment fell 0.6 percent, reversing the upward-revised increase in October. The drop reflected widespread declines in the production of most types of business equipment. A notable exception was the production of computers, where continued strength pushed up the reading on the output of information processing equipment. Declines in the production of civilian aircraft and business vehicles lowered the overall output of transit equipment, and further weakness in the production of farm machinery reduced output in the "other equipment" category.

The output of construction supplies increased 0.7 percent after having risen 1.1 percent in October. Gains continued to be widespread among most of the underlying components of this index. In contrast, the production of business supplies fell 1.0 percent, a drop that reflected, in part, the reduced commercial use of energy.

The production of materials fell 0.3 percent after having dropped 0.2 percent in October. The production of durable goods materials edged up 0.2 percent, as continued strength in the production of semiconductors, printed circuit boards, and other electronic components was only partly offset by a sharp drop in the production of basic metals; the production of iron and steel fell 5.0 percent. The output of nondurable goods materials slipped again, with weakness in the production of chemicals, textiles, and paper. Because of the drop in electricity generation, the output of energy materials fell 1.8 percent.

Industry Groups

Manufacturing output was unchanged as gains in the production of nondurable goods were offset by a falloff in the production of durables. Among durables, declines in the production of primary metals, industrial machinery other than computers, and transportation equipment contributed to the November weakness. In contrast, the production of nondurable goods edged up 0.2 percent and was led by increases of 1/2 percent or more in the production of foods, petroleum products, and rubber and plastic products. The reading on mining production continued to fall, being pulled down by the continued contraction in oil and gas extraction and declines in natural gas output and coal mining activity.

The factory operating rate dropped 0.4 percentage point, to 79.8 percent--more than 2-3/4 percentage points below the level it had reached in November 1997. Utilization rates for both primary- and advanced-processing industries have fallen this year to levels below their historical averages. Similarly, utilization at mines fell to 83.5 percent--more than 4 percentage points below its year-ago level and well below its historical averages.

Revision of Industrial Production and Capacity Utilization

On November 24, the Federal Reserve published revisions to its measures of industrial production (IP), capacity, capacity utilization, and industrial use of electric power. The revisions began with 1992 and incorporated updated source data for more recent years.

This regular updating of source data for IP included annual data from the Bureau of the Census's 1996 Annual Survey of Manufactures and from selected editions of its 1997 Current Industrial Reports. Annual data from the Department of the Interior on metallic and nonmetallic minerals (except fuels) for 1996 and 1997 were also introduced. The updating also included revisions to the monthly indicators for each industry (physical product data, production-worker hours, or electric power usage) and revised seasonal factors. In addition, the revision introduced improved measures of production for semiconductors, coal, lawn and garden equipment, and aircraft.

Capacity and capacity utilization were revised to incorporate preliminary data from the Census Bureau's 1997 Survey of Plant Capacity. The statistics on the industrial use of electric power incorporated more complete reports received from utilities for the past few years as well as data from the 1996 Annual Survey of Manufactures.

The revised data are available on the the Board's web site, http://www.federalreserve.gov/releases/g17, and on diskettes from Publications Services (telephone 202-452-3245). Further information on these revisions is available from the Board's Industrial Output Section (telephone 202-452-3197).

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.

G.17 Release Tables:

Chart 1: Industrial Production and Capacity Utilization
Table 1A: Industrial Production: Market Groups (index)
Table 1B: Industrial Production: Market Groups (percent change)
Table 2A: Industrial Production: Industry Groups (index)
Table 2B: Industrial Production: Industry Groups (percent change)
Table 3: Capacity Utilization: Manufacturing, Mining, and Utilities
Table 4: Industrial Capacity: Manufacturing, Mining, and Utilities
Table 5A: Industrial Production, Capacity and Utilization for Total Industry: Historical Data
Table 5B: Industrial Production, Capacity and Utilization for Manufacturing: Historical Data
Table 6: Industrial Production: Industry Subtotals and Individual Series
Table 7: Industrial Production: Gross Value of Products
Table 8: Diffusion Indexes of Industrial Production
Table 9: Electric Power Use: Manufacturing and Mining

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Last update: December 16, 1998, 9:15 AM