Industrial Production and Capacity Utilization

Release Date: November 15, 2002
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INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
[2002 Revision Notice Below]

Industrial production fell 0.8 percent in October. At 139.3 percent of its 1992 average, the October index was just 1.2 percent higher than its year-ago level. Manufacturing output decreased 0.7 percent in October. The recent lockout at the West Coast ports apparently accounted for only a small portion of this decline. Mining output fell 1.0 percent, as storm-related disruptions in the Gulf Coast region curtailed the output of crude oil and natural gas. Utilities production declined 1.6 percent. The rate of capacity utilization for total industry fell 0.6 percentage point, to 75.2 percent, a level 6.7 percentage points below its 1967-2001 average.

 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION:  SUMMARY
 Seasonally adjusted
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                    1992=100                     |                  Percent change
                               | ----------------------------------------------- | -------------------------------------------------
                               |       2002                                      |   2002                          |    Oct. '01 to 
 Industrial production         |       July        Aug.       Sept.        Oct.  |   July    Aug.   Sept.    Oct.  |      Oct. '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total index                  |      141.0       140.7       140.4       139.3  |     .5     -.2     -.2     -.8  |            1.2 
     Previous estimates        |      141.1       140.6       140.5              |     .5     -.3     -.1          |                
                               |                                                 |                                 |
  Major market groups:         |                                                 |                                 |
  Products, total              |      128.5       128.1       127.8       126.7  |     .4     -.3     -.3     -.9  |            -.1 
     Consumer goods            |      123.1       121.8       121.6       120.7  |     .7    -1.1     -.1     -.8  |             .9 
     Business equipment        |      163.8       164.7       162.3       159.1  |     .0      .5    -1.5    -2.0  |           -4.6 
     Construction supplies     |      138.5       140.3       140.6       139.7  |   -1.4     1.3      .2     -.6  |            3.8 
  Materials                    |      162.5       162.4       162.2       161.0  |     .7      .0     -.1     -.7  |            3.3 
                               |                                                 |                                 |
  Major industry groups:       |                                                 |                                 |
  Manufacturing                |      145.6       145.5       144.9       143.9  |     .4     -.1     -.4     -.7  |            1.3 
     Durable                   |      180.3       181.3       180.2       178.1  |     .3      .5     -.6    -1.2  |            2.4 
     Nondurable                |      111.9       111.1       110.9       110.7  |     .5     -.7     -.2     -.2  |            -.1 
  Mining                       |       95.9        96.3        95.7        94.8  |    -.1      .4     -.6    -1.0  |           -4.7 
  Utilities                    |      127.8       124.6       127.6       125.6  |    2.3    -2.5     2.4    -1.6  |            5.2 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                                                   |    Capacity
                               |                                Percent of capacity                                |     growth
                               | --------------------------------------------------------------------------------- | ---------------
                               |     Average        1982     1988-89       2001  |   2002                          |    Oct. '01 to 
 Capacity utilization          |  1967-2001          Low        High       Oct.  |   July    Aug.   Sept.    Oct.  |      Oct. '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total industry               |       81.9        71.1        85.4        75.0  |   76.3    76.1    75.8    75.2  |            1.0 
     Previous estimates        |                                                 |   76.3    76.0    75.9          |                
                               |                                                 |                                 |
  Manufacturing                |       80.9        69.0        85.7        73.3  |   74.6    74.5    74.1    73.5  |            1.0 
     Advanced processing       |       80.3        71.0        84.2        72.9  |   73.1    72.8    72.4    71.7  |             .6 
     Primary processing        |       82.0        65.7        88.3        73.9  |   76.9    77.0    76.8    76.3  |            1.6 
  Mining                       |       87.6        80.3        88.0        88.4  |   85.0    85.3    84.8    83.9  |             .4 
  Utilities                    |       87.6        75.9        92.6        85.7  |   88.8    86.4    88.2    86.6  |            4.1 
 -----------------------------------------------------------------------------------------------------------------------------------
 Note:  Estimates for October are preliminary.  Estimates from July to September are revised.

Market Groups

The output of consumer goods decreased 0.8 percent in October, its third consecutive monthly decline. The production of durable consumer goods fell 2.5 percent; a 4.4 percent decline in the output of automotive products accounted for much of the drop. The production of appliances and furniture also decreased, while the output of home electronics products and of miscellaneous goods rose. The production of nondurable consumer goods fell 0.3 percent; the index for non-energy nondurables edged down 0.1 percent, and the index for consumer energy products fell 1.5 percent. Among non-energy nondurables, declines in the output of clothing, paper products, and chemical products slightly more than offset a rise in the production of foods and tobacco.

The production of business equipment dropped 2.0 percent in October after having declined 1.5 percent in September. A 6.5 percent drop in the output of transit equipment was largely responsible for the October decline, and the main contributor was a reduction in the production of motor vehicles. In addition, the production of industrial and other equipment contracted 1.4 percent; most industries within the category posted declines. Continued weakness in the output of information processing equipment largely reflected ongoing declines in the communications industry. The index for defense and space equipment rose 0.9 percent and was 6.6 percent above its level of a year ago. The output of construction supplies decreased 0.6 percent. The output of business supplies dipped 0.3 percent, primarily because of a weakening in the production of commercial energy products.

The output of industrial materials fell 0.7 percent. The drop was the largest since December 2001, and production declined in all of the major categories. Among durable materials, the output of consumer parts dropped 2.0 percent, and equipment parts and other materials fell slightly. Production in the major categories of nondurable materials--textile, paper, and chemical--declined last month.

Industry Groups

Manufacturing output moved down 0.7 percent; the index for durable goods decreased 1.2 percent, and the index for nondurables slipped 0.2 percent. The largest decline among major durable goods industries was in motor vehicles and parts, which dropped 5.2 percent; about one-third of the decline was due to parts shortages resulting from effects of the port shutdowns on the West Coast. The production of furniture and fixtures, industrial machinery and equipment, and lumber and products registered sizable declines. The losses for industrial machinery included reductions in construction equipment and in engines primarily used in medium and heavy trucks and in off-highway equipment. The index for computers, however, posted a gain for a fourth consecutive month. The increases in the computer index in the third quarter were revised upward. A rise in the output of primary metals reversed much of September's loss, and was led by an increase in steel production. The decline in nondurable goods comprised an increase in the production of food and tobacco products that was more than offset by declines in the production of most other major nondurables industries, especially chemicals and products and paper and products.

The factory operating rate in October was 73.5 percent, 7.4 percentage points below its 1967-2001 average. The utilization rates for advanced processing and primary processing fell in October. The operating rate at mines decreased 0.9 percentage point to 83.9 percent, and the rate at utilities declined 1.6 percentage points, to 86.6 percent.

Revision of Industrial Production and Capacity Utilization

On November 26, at 2 p.m. Eastern time, 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 (SIC) system. 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 indexes will be incorporated into the revised IP indexes as far back as the data will allow.

The revised indexes will be expressed as percentages of output in 1997, beginning at the start date of each index: 1919 for total and manufacturing IP, 1948 for manufacturing capacity, and 1967 for total industrial capacity. The Federal Reserve's accompanying indexes of industrial electric power use, which began in 1972, also will be restated to accord with NAICS, rebased to use 1997 as a comparison year, and revised to incorporate previously unavailable data.

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

Statistical releases

Last update: November 15, 2002, 9:15 AM