INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2002 Revision Notice Below]

Industrial production rose 0.8 percent in June, its sixth consecutive monthly increase; production for the second quarter was up at an annual rate of 4.6 percent. In June, at 140.6 percent of its 1992 average, industrial production reached its highest level since May 2001 but was 4.5 percent below its June 2000 peak. Manufacturing output also posted its sixth consecutive monthly increase, rising 0.7 percent in June. Output at mines expanded 1.1 percent, and production at utilities increased 1.6 percent. The rate of capacity utilization for total industry rose to 76.1 percent, a rate 1.7 percentage points above its trough in December 2001.

 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION:  SUMMARY
 Seasonally adjusted
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                               |                    1992=100                     |                  Percent change
                               | ----------------------------------------------- | -------------------------------------------------
                               |       2002                                      |   2002                          |    June '01 to 
 Industrial production         |       Mar.        Apr.         May        June  |   Mar.    Apr.     May    June  |      June '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total index                  |      138.6       138.9       139.5       140.6  |     .3      .2      .4      .8  |             .2 
     Previous estimates        |      138.7       139.1       139.3              |     .4      .3      .2          |                
                               |                                                 |                                 |
  Major market groups:         |                                                 |                                 |
  Products, total              |      127.4       127.0       127.2       128.1  |     .4     -.3      .1      .7  |           -1.5 
     Consumer goods            |      121.7       121.3       121.4       122.4  |     .4     -.3      .1      .8  |            1.0 
     Business equipment        |      163.5       163.1       163.3       163.7  |    -.3     -.3      .1      .2  |           -7.9 
     Construction supplies     |      139.7       139.0       139.1       139.6  |    2.2     -.5      .1      .3  |            1.2 
  Materials                    |      157.4       159.1       160.5       162.0  |     .2     1.1      .9      .9  |            2.9 
                               |                                                 |                                 |
  Major industry groups:       |                                                 |                                 |
  Manufacturing                |      143.4       143.5       144.3       145.4  |     .4      .1      .5      .7  |             .3 
     Durable                   |      176.6       177.4       178.7       180.1  |     .3      .5      .7      .8  |             .0 
     Nondurable                |      110.9       110.6       111.0       111.7  |     .4     -.3      .4      .6  |             .6 
  Mining                       |       95.4        96.2        96.3        97.3  |   -1.3      .8      .1     1.1  |           -5.1 
  Utilities                    |      121.8       122.8       121.7       123.7  |    1.3      .8     -.9     1.6  |            3.8 
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                               |                                                                                   |    Capacity
                               |                                Percent of capacity                                |     growth
                               | --------------------------------------------------------------------------------- | ---------------
                               |     Average        1982     1988-89       2001  |   2002                          |    June '01 to 
 Capacity utilization          |  1967-2001          Low        High       June  |   Mar.    Apr.     May    June  |      June '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total industry               |       81.9        71.1        85.4        76.7  |   75.2    75.3    75.6    76.1  |            1.0 
     Previous estimates        |                                                 |   75.3    75.4    75.5          |                
                               |                                                 |                                 |
  Manufacturing                |       80.9        69.0        85.7        75.0  |   73.7    73.7    74.0    74.5  |             .9 
     Advanced processing       |       80.3        71.0        84.2        75.0  |   72.8    72.5    72.6    73.0  |             .6 
     Primary processing        |       82.0        65.7        88.3        74.9  |   75.1    75.5    76.3    76.8  |            1.5 
  Mining                       |       87.6        80.3        88.0        91.4  |   84.5    85.2    85.3    86.2  |             .7 
  Utilities                    |       87.6        75.9        92.6        87.0  |   85.8    86.2    85.1    86.2  |            4.8 
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 Note:  Estimates for June are preliminary.  Estimates from March to May are revised.
 
 
 

Market Groups

The output of consumer goods advanced 0.8 percent in June with widespread increases among both durable and nondurable goods. The production of durables rose 1.1 percent, to its highest level since September 2000, while the output of nondurables gained 0.7 percent. A sharp increase in motor vehicle assemblies contributed significantly to the rise in the output of durables. However, the overall rise for consumer durables was tempered by a decline in output at appliance manufacturers. The appliance, furniture, and carpeting group fell 2.9 percent after having risen at about that rate in May. Among nondurables, non-energy production expanded 0.8 percent and was led by gains in the indexes for paper products and for food and tobacco. Among energy products, strong electricity sales were offset by declines elsewhere.

The output of business equipment inched up in both May and June but remained below the level at the beginning of the year. The output of information processing equipment strengthened in both months and reached its highest level since July 2001. Despite strength in the assembly of automobiles and light trucks, the output of transit equipment continued its downward trend and fell to its lowest level since November 1996. During the past year, the principal contributor to the weakness in this group has been commercial aircraft. Industrial and other equipment also declined a bit in June after having risen nearly 2 percent in May. The output of defense and space equipment posted its fourth consecutive monthly increase and reached its highest level since July 2000.

The production of construction supplies rose 0.3 percent in June to end the quarter 4.2 percent above its November 2001 low. The index for business supplies jumped 1.2 percent, but it has risen only about 2 percent since the start of the year after having fallen about 7 percent during 2001.

Materials production, continuing its recent strength, increased 0.9 percent in June. The index now stands at its highest level since February 2001. Durable materials posted a gain of 1.2 percent with all major categories contributing similarly to the rise in output. An increase of 0.2 percent for nondurable materials output reflected increases in the production of chemicals and textiles that were mostly offset by a decline in paper production. The index for energy materials increased 0.9 percent with gains in both converted fuels and primary energy.

Industry Groups

Manufacturing output rose 0.7 percent in June. Production advanced for all major groups of durable goods except furniture and fixtures and aerospace and miscellaneous transportation equipment. The largest gains were in motor vehicles and parts, miscellaneous manufactures, instruments, and primary metals; fabricated metal products and industrial machinery also posted increases. The durables index has risen 3.4 percent since its December 2001 low. Among producers of nondurables, the primary contributors to the June increase were food and tobacco products, printing and publishing, and rubber and plastics. Only the output of petroleum products declined.

The factory operating rate increased 0.5 percentage point in June, to 74.5 percent, but it remained more than 6 percentage points below its 1967-2001 average. The utilization rate for advanced-processing industries rose to 73.0 percent, while the rate for primary-processing industries rose to 76.8 percent. The utilization rate for the selected high-technology industries edged up, to 65.9 percent, a rate still well below the low of 72.4 percent reached in 1991 but more than 5 percentage points above the recent low in December 2001. The operating rates for utilities and for mining both increased to 86.2 percent.

Revision of Industrial Production and Capacity Utilization

On November 26, the Federal Reserve Board will publish a revision to the index of industrial production (IP), the related measures of capacity and capacity utilization, and the data on industrial use of electric power. The revised estimates will be classified according to the 2002 North American Industrial Classification System (NAICS); previously, the estimates from 1987 forward were classified according to the 1987 Standard Industrial Classification system (SIC). NAICS changes the SIC system's industry composition of manufacturing. To preserve the continuity of the production, capacity, and utilization rate measures featured in the Federal Reserve's G.17 statistical release, portions of SIC 27 (printing and publishing) and SIC 24 (lumber and products) that are not classified in manufacturing under NAICS will continue to be included in the overall IP index and capacity utilization.

The revised production indexes will be based on annual output measures that are constructed by reclassifying the establishments in historical Censuses of Manufactures and Mineral Industries under NAICS; annual output indexes constructed this way will maximize the reliability and historical consistency of the IP industry detail. Data going back to at least 1972 will be restated using NAICS. The monthly indicators used in current IP will be incorporated into the revised IP indexes as far back as the data will allow.

The updated measures will reflect the incorporation of newly available, more comprehensive source data typical of annual revisions. The updating of source data for IP in the 2002 annual revision will include annual data from the 2000 Annual Survey of Manufactures of the Bureau of the Census and from selected editions of its 2000 and 2001 Current Industrial Reports. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2000 and 2001 will also be introduced. The updating will include revisions to the monthly indicator for each industry (either physical product data, production-worker hours, or electric power usage) and revisions to seasonal factors.

Capacity and capacity utilization will be revised to incorporate preliminary data from the 2001 Survey of Plant Capacity of the Bureau of the Census, which covers manufacturing, along with other new data on capacity from the U.S. Geological Survey, the Department of Energy, and other organizations. The statistics on the industrial use of electric power will incorporate additional information received from utilities for the past few years and will include some data from the 2000 Annual Survey of Manufactures.

Once the revision is published, it will be made available on the Board's web site, www.federalreserve.gov/releases/G17. The revised data will also be available through the web site of the Department of Commerce. Further information on these revisions is available from the Board's Industrial Output Section (telephone 202-452-3197).

G.17 Release Tables: