Board of Governors of the Federal Reserve System

Industrial Production and Capacity Utilization - G.17

About the G.17

The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The industrial detail provided by these measures helps illuminate structural developments in the economy.

The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The production indexes are computed as Fisher indexes since 1972; the weights are based on annual estimates of value added. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.

Further Documentation

Articles, Papers, and Presentations

The Federal Reserve issues a revision of its industrial production and capacity utilization measures each year, usually in early spring. An article discussing the results of the annual revision and any new methods employed is usually published later in the year, either in the Federal Reserve Bulletin or on-line. Links to these articles as well as to other Federal Reserve staff publications that provide relevant analysis or in-depth details of methodological procedures are shown below.

Articles for recent years
  • February 2014 [ PDF (88 KB) | HTML]: On March 22, 2013, the Federal Reserve published revisions to its index of industrial production (IP) and the related measures of capacity and capacity utilization. Measured from fourth quarter to fourth quarter, total IP was 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 with the previous estimates, IP fell slightly less in 2008 and 2009 and increased slightly less in 2010 and 2012. Notably, benchmark data from the U.S. Census Bureau's Annual Survey of Manufactures (ASM) for 2011 implied that factory production increased more slowly in 2011 than previously reported. The gains in factory output would have been even slower if not for upward revisions to the production of high-technology goods. Output indexes for high-technology goods that were stronger than previously reported contributed positively to the rates of change in total output in every year since 2008
  • February 2014 [ PDF (130 KB) | HTML]: On March 30, 2012, the Federal Reserve published revisions to its index of industrial production (IP) and the related measures of capacity and capacity utilization. Revisions were minor and the overall contour of total IP was little changed. In particular, a decline of 17 percent from December 2007 to June 2009 was followed by steady gains beginning in the second half of 2009 and continuing through early 2012. Measured from fourth quarter to fourth quarter, total IP was reported to have dropped about 1/4 percentage point more in 2009, while its gains in both 2010 and 2011 were essentially unchanged from what was previously reported. From the trough of the most recent recession in June 2009 through February 2012, total IP reversed about three-fourths of its peak-to-trough decline.
  • April 2011 [ PDF (440 KB) | HTML]: On June 25, 2010, the Federal Reserve published revisions to its index of industrial production (IP) and the related measures of capacity and capacity utilization. Although rates of change from January 1972 through May 2010 were affected, the overall contour of total IP in recent years was little changed by the revision.
  • August 2009 [ PDF (1.14 MB) | HTML ]: On March 27, 2009, the Federal Reserve published revisions to its index of industrial production (IP) and the related measures of capacity and capacity utilization. Although rates of change from January 1972 through February 2009 were affected, the revison had its largest impact on data in 2007 and 2008.
  • August 2008 [ PDF (858 KB) | HTML ]: On March 28, 2008, the Federal Reserve published revisions to its index of industrial production (IP) and the related measures of capacity and capacity utilization. Although the revision affected the data from January 1972 through February 2008, most of the changes were for the period beginning in 2003.
  • Winter 2007 [ PDF (144 KB) | HTML ]: On December 11, 2006, the Federal Reserve published revisions to its index of industrial production and the related measures of capacity and capacity utilization. The revision affected the data from 1972 through October 2006, but the largest changes were for the period beginning in 2003.
  • Winter 2006 [ PDF (161 KB) ]: The comparison base year for all industrial production (IP) and capacity indexes was changed: The indexes are now expressed as percentages of output in 2002 instead of 1997. The rebasing affects all series from their start dates: 1919 for total IP and manufacturing IP, 1948 for manufacturing capacity, and 1967 for total industrial capacity. With this revision, the monthly production indicators for twenty industries changed from electric power use to production-worker hours for 1997 to the present.
  • March 2006 Capital Stock Estimates for Manufacturing Industries: Methods and Data [ PDF (113 KB) ]: This paper documents the methods and source data used by Federal Reserve Board staff to estimate U.S. manufactures' real net capital stocks of equipment and structures. The estimates, which begin in 1958 and cover 164 detailed manufacturing industries, are developed by the perpetual inventory method from investment data. Conceptually, the measures are designed to represent the available productive capability of the manufacturing capital stock; in developing the net stocks, each vintage of investment is adjusted for expected losses in efficiency owing to the joint effects of discards and economic decay.
  • Winter 2005 [ PDF (130 KB) ]: The benchmark indexes for manufacturing, defined for each six-digit NAICS industry as nominal gross output divided by a price index, were modified in this revision. With this revision, the monthly individual production indicators for some series have changed. The source data for eleven industries were switched from electric power use to production-worker hours. The revision to the capacity indexes used updated information for the publishing industry, for which there had been a gap in the collection of operating rates.
  • Winter 2004 [ PDF(119 KB PDF) ]: This revision included a rearrangement of the market groups based on the 1997 input-output tables recently issued by the Bureau of Economic Analysis as well as updated value-added weights used in aggregating individual indexes.
  • Papers presented at American Statistical Association meeting in August 2003. These papers describe the staff's work to convert the industrial production index from an SIC basis to a NAICS basis, the extension of the NAICS-based results back to 1972, and an analysis of the results.
  • April 2003 [ PDF (193 KB): This major revision incorporated the reclassification back to 1972 of production and capacity indexes for individual industries from the Standard Industrial Classification System to the North American Industry Classification System. In addition, production and capacity indexes are now expressed as percentages of output in 1997; previously the reference year was 1992. Improved methods for measuring the real output of communications equipment also were introduced.
Articles for earlier years
  • March 2002 [ PDF (91 KB) ]: Introduces new source data for two capacity series: natural gas extraction and silver. The monthly production indicators for construction machinery and original equipment motor vehicle parts were refined.
  • March 2001 [ PDF (113 KB) ]: Introduces new production measures in communications equipment, computer and office equipment, drugs and medicines, and bearings.
  • March 2000 [ PDF (104 KB) ]: Includes updated capacity estimation procedures.
  • January 1999 [ PDF (82 KB) ]: Includes new methods for estimating the output of the semiconductor industry.
  • February 1998 [ PDF (95 KB) ]: Includes redesign of series on oil and gas field services.
  • February 1997 [ PDF (212 KB) ]: Reviews introduction of new aggregation methods
  • January 1996 [ PDF (86 KB) ]: Introduces new source data on organic chemicals, service industry machinery, and plumbing and heating products.
Presentations
  • May 11, 2012 Recessions and Seasonal Adjustment of Industrial Production [ PDF (575 KB) ]: Presented by Charles Gilbert on May 11, 2012, at the Bureau of Economic Analysis, Washington D.C. Mr. Gilbert is a Senior Economist in the Industrial Output Section of the Federal Reserve Board's Division of Research and Statistics.


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Last update: June 27, 2014