INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2001 Revision Notice Below]

Industrial production fell 1.0 percent in September, its twelfth consecutive monthly decline. At 140.3 percent of its 1992 average, output was 5.8 percent below its level in September 2000. For the third quarter as a whole, total industrial production declined at an annual rate of 6.2 percent. Manufacturing output contracted 1.1 percent in September and was 6.7 percent below its year-ago level. Utilities production fell 1.8 percent in September, and mining output increased 0.3 percent. The rate of capacity utilization for total industry sank 0.9 percentage point, to 75.5 percent, a level 6.6 percentage points below its 1967-2000 average and about 7 percentage points below its level in September 2000.

 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION:  SUMMARY
 Seasonally adjusted
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                               |                    1992=100                     |                  Percent change
                               | ----------------------------------------------- | -------------------------------------------------
                               |       2001                                      |   2001                          |   Sept. '00 to 
 Industrial production         |       June        July        Aug.       Sept.  |   June    July    Aug.   Sept.  |     Sept. '01 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total index                  |      142.8       142.7       141.8       140.3  |   -1.0     -.1     -.7    -1.0  |           -5.8 
     Previous estimates        |      142.7       142.6       141.5              |   -1.0     -.1     -.8          |                
                               |                                                 |                                 |
 Major market groups:          |                                                 |                                 |
  Products, total              |      132.4       132.5       131.3       129.9  |    -.9      .0     -.8    -1.1  |           -5.0 
     Consumer goods            |      121.6       121.9       120.9       120.1  |    -.5      .2     -.8     -.7  |           -3.0 
     Business equipment        |      187.1       186.7       184.8       180.5  |   -2.5     -.2    -1.0    -2.3  |           -9.5 
     Construction supplies     |      139.0       139.0       138.5       137.6  |    -.2      .0     -.4     -.6  |           -3.9 
  Materials                    |      161.4       161.1       160.5       159.2  |   -1.1     -.2     -.4     -.9  |           -7.1 
                               |                                                 |                                 |
 Major industry groups:        |                                                 |                                 |
  Manufacturing                |      147.5       147.6       146.3       144.7  |   -1.2      .1     -.9    -1.1  |           -6.7 
     Durable                   |      186.9       187.6       185.7       182.5  |   -1.7      .3    -1.0    -1.8  |           -8.0 
     Nondurable                |      111.5       111.3       110.5       110.1  |    -.6     -.2     -.7     -.3  |           -5.0 
  Mining                       |      103.4       102.3       102.0       102.3  |    -.4    -1.0     -.3      .3  |            1.8 
  Utilities                    |      119.9       119.0       121.3       119.1  |     .3     -.7     1.9    -1.8  |           -2.1 
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                               |                                                                                   |    Capacity
                               |                                Percent of capacity                                |     growth
                               | --------------------------------------------------------------------------------- | ---------------
                               |     Average        1982     1988-89       2000  |   2001                          |   Sept. '00 to 
 Capacity utilization          |  1967-2000          Low        High      Sept.  |   June    July    Aug.   Sept.  |     Sept. '01 
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                               |                                                 |                                 |
  Total industry               |       82.1        71.1        85.4        82.4  |   77.1    77.0    76.4    75.5  |            2.9 
     Previous estimates        |                                                 |   77.1    76.9    76.2          |                
                               |                                                 |                                 |
     Manufacturing             |       81.1        69.0        85.7        81.7  |   75.6    75.5    74.8    73.8  |            3.2 
        Advanced processing    |       80.6        71.0        84.2        80.2  |   76.1    76.0    75.3    74.3  |            2.0 
        Primary processing     |       82.2        65.7        88.3        85.2  |   75.8    75.6    74.8    74.0  |            5.4 
     Mining                    |       87.4        80.3        88.0        86.4  |   90.0    89.2    89.0    89.3  |           -1.4 
     Utilities                 |       87.6        75.9        92.6        91.0  |   87.2    86.3    87.6    85.7  |            3.9 
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 Note:  Estimates for September are preliminary.  Estimates from June to August are revised.
 
 
 

Market Groups

The output of consumer goods fell 0.7 percent in September; for the third quarter as a whole, production dropped 3.2 percent at an annual rate, the largest quarterly decline since the first quarter of 1991. Both durable and nondurable consumer goods fell in September. Among durables, home electronics dropped 3.0 percent and was 19.1 percent below its level in September 2000. The output of automotive products also fell about 3 percent, while the other major categories of consumer durables registered smaller declines. Nondurable consumer goods, which slipped 0.3 percent, showed declines in all categories except paper products, which increased 0.4 percent.

The production of business equipment dropped 2.3 percent in September; for the third quarter as a whole, it tumbled 13.4 percent at an annual rate, its largest quarterly decline since the fourth quarter of 1982. All major categories declined in September; the output indexes for transit equipment and for industrial and other equipment have contracted nearly 12 percent in the past twelve months. The production of defense and space equipment, which ticked up 0.2 percent in September, was 3.6 percent above its September 2000 level.

The output of construction supplies decreased 0.6 percent in September, while the output of business supplies fell 1.5 percent; a sharp cutback in jet fuel production, which was related to the reduction in air traffic, contributed importantly to the drop for business supplies. The production of industrial materials declined 0.9 percent, with a large drop in durable goods materials and little change, on balance, in either nondurable or energy materials. For the third quarter as a whole, production of industrial materials fell at an annual rate of 6.4 percent.

Industry Groups

Manufacturing output fell 1.1 percent in September and the weakness was widespread among industries. In the third quarter, manufacturing declined at an annual rate of 6.6 percent, after having fallen at a 5.1 percent rate in the second quarter. The overall production both of durable and nondurable goods decreased in the third quarter; output rose during the quarter in only two industries--motor vehicles and parts and lumber and products. Among durable goods, the largest third-quarter declines were in machinery, especially the high-technology industries (computers, communications equipment, and semiconductors). Also down notably were furniture and fixtures, primary metals, aerospace and miscellaneous transportation equipment, and miscellaneous manufacturing. Among nondurables, declines were largest in apparel products, textile mill products, petroleum products, printing and publishing, and paper and products. In September, all major industry groups in manufacturing were below year-ago levels. The overall factory operating rate declined about 1 percentage point, to 73.8 percent, a level 7.3 percentage points below the 1967-2000 average.

A 0.3 percent increase in the production at mines retraced the August decline; the utilization rate at mines rose 0.3 percentage point, to 89.3 percent, a level about 2 percentage points above its 1967-2000 average. The output of utilities fell back 1.8 percent in September; at 85.7 percent, the operating rate at utilities was about 2 percentage points below its long-term average.

Revision of Industrial Production and Capacity Utilization

On November 27, the Federal Reserve Board will publish revisions to the index of industrial production (IP), to the related measures of capacity and capacity utilization, and to the index of industrial use of electric power. The updated measures will reflect the incorporation of newly available, more comprehensive source data typical of annual revisions. The new source data are for recent years, primarily 1999 and 2000, although data from 1992 onward will be subject to revision.

Industrial production and capacity utilization will continue to be based on the 1987 Standard Industrial Classification (SIC) until the 2002 annual revision, after which they will be constructed from the North American Industrial Classification System (NAICS). The new NAICS-related 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.

The updating of source data for IP in the 2001 annual revision will include annual data from the 1999 Bureau of the Census Annual Survey of Manufactures and from selected editions of its 1999 and 2000 Current Industrial Reports. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 1999 and 2000 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 to seasonal factors.

Capacity and capacity utilization will be revised to incorporate preliminary data from the 2000 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 1997 Census of Manufactures and the 1998 and 1999 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: