INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION

[2005 Revision Notice Below]

Industrial production increased 0.9 percent in October after a drop of 1.5 percent in September. Hurricane-related recoveries in many industries and the resolution of a strike at a major aircraft producer contributed significantly to the increase in output. At 107.9 percent of its 2002 average, output in October was 1.9 percent above its year-earlier level. Manufacturing production increased 1.4 percent, a rise that more than reversed its September decline of 0.7 percent. The output at mines edged down 0.5 percent after having fallen 8-1/2 percent in September, and the output at utilities decreased 1.9 percent. Capacity utilization for total industry rose 0.6 percentage point, to 79.5 percent, a rate that is 0.3 percentage point above its year-earlier level but 1.5 percentage points below its 1972-2004 average.

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION: SUMMARY
Seasonally adjusted

Industrial production	2002=100				Percent change
	2005				2005				Oct. '04 to Oct. '05
	July	Aug.	Sept.	Oct.	July	Aug.	Sept.	Oct.
Total index	108.3	108.5	106.9	107.9	.0	.2	-1.5	.9	1.9
Previous estimates	108.2	108.7	107.1		.0	.4	-1.5
Major market groups
Final Products	109.7	110.0	109.0	110.6	.1	.3	-.9	1.4	4.0
Consumer goods	105.2	105.6	106.1	105.7	-.5	.4	.4	-.3	2.1
Business equipment	120.0	120.2	114.7	122.2	1.3	.2	-4.6	6.6	8.5
Nonindustrial supplies	107.4	107.8	107.7	108.3	.0	.3	.0	.5	3.1
Construction	107.5	108.3	109.6	111.1	.6	.7	1.2	1.4	4.7
Materials	107.2	107.2	104.4	105.0	-.1	.0	-2.6	.6	-.5
Major industry groups
Manufacturing (see note below)	109.1	109.6	108.8	110.4	.1	.4	-.7	1.4	3.2
Previous estimates	109.1	109.8	109.0		.1	.6	-.7
Mining	99.8	99.0	90.5	90.0	-1.0	-.7	-8.6	-.5	-8.0
Utilities	108.1	107.1	106.1	104.1	-.1	-.9	-.9	-1.9	1.3

Market Groups

The output of consumer goods decreased 0.3 percent in October and was led by a decline of 0.8 percent in the production of durable goods. Among durables, the output of automotive products dropped 1.3 percent, and the index for appliances, furniture, and carpeting fell 0.7 percent; however, both groups had posted significant gains during the third quarter. On the positive side, the output of home electronics rose 0.8 percent in October after contracting sharply during the previous four months, and the index for miscellaneous goods edged up after posting sizable gains in the previous two months. The output of consumer nondurable goods, which edged down 0.2 percent, continued its string of recent declines. Consumer energy products contracted 1.6 percent further after falling 2.5 percent in September, as hurricane-related shutdowns continued to crimp production. Among non-energy nondurable goods, the output of foods and tobacco slipped 0.1 percent, and the production of clothing dropped 2.5 percent. The output of consumer chemical products rose 0.6 percent, and the output of paper products increased 1 percent; both indexes had declined during the third quarter.

The production of business equipment jumped 6.6 percent. The resolution of the aircraft manufacturing strike was the principal reason for an increase of nearly 37 percent in the index for transit equipment. The output of information processing equipment rose 1.8 percent to a level nearly 18 percent higher than it was a year earlier, and the production of industrial and other equipment rose 0.6 percent. The output of defense and space equipment increased 2.3 percent, more than reversing its September decline. The gain reflected mainly a bounceback in shipbuilding that followed a hurricane-related curtailment in production. The index for construction supplies popped up 1.4 percent after expanding 1.2 percent in September; the gains were concentrated in industries that may have benefited from rebuilding efforts in the wake of Hurricanes Katrina and Rita. The index for business supplies edged up 0.2 percent, as weaker output of commercial energy products only partly offset rising output of general business supplies.

The output of materials rose 0.6 percent. The index for non-energy materials increased 1.2 percent, while the index for energy materials fell 1 percent. Output rose for all categories of durable materials. Among non-energy nondurable materials, results were mixed: Paper output increased, textiles output edged down, and chemicals output only partly reversed its sizable storm-related decline in September.

Industry Groups

Manufacturing production rose 1.4 percent in October. The production of durables, which expanded 2.2 percent, was spurred by a rebound in aerospace and miscellaneous transportation equipment that followed the settlement of a strike. In the computer and electronic products industry, output rose 1.7 percent; the communications equipment industry recorded a sizable gain, while the production of semiconductors increased a bit more slowly than in the previous couple of months. Significant gains were also posted in a number of other durable goods industries, including wood products; nonmetallic mineral products; fabricated metal products; electrical equipment, appliances, and components; and miscellaneous manufacturing. Industries with decreases in output included primary metals and motor vehicles and parts, both of which had seen large increases during the previous two months. Output also moved down in the industries for machinery and for furniture and related products. The output of nondurable manufacturing industries rose 0.5 percent, a gain that was more than accounted for by an increase of 2.4 percent in the output of chemical industries. Production increased slightly in the industries for textiles and products, for paper, and for printing and support, while output was unchanged in the food, beverage, and tobacco products industry. The production of petroleum and coal products moved down 1.8 percent after a cumulative decline of almost 9-1/2 percent over the previous three months. The output of non-NAICS manufacturing industries (publishing and logging) rose 0.8 percent. Taken together, the changes in manufacturing output boosted the factory operating rate 0.9 percentage point, to 79.0 percent.

The output at mines edged down 0.5 percent, as the extraction of oil and gas in the Gulf of Mexico retreated from already depressed levels of activity. Capacity utilization in mining fell to 80.4 percent, a rate that is roughly 9 percentage points below its level in early summer. The output at utilities dropped 1.9 percent, and the operating rate fell to 84.8 percent.

By stage of process, capacity utilization for industries at the crude stage rose 0.6 percentage point, to 78.7 percent, a rate still well below pre-hurricane levels. At the primary and semifinished stage, capacity utilization was 81.7 percent and has varied by no more than 0.1 percentage point since June. At the finished stage, capacity utilization rose 1.4 percentage points, to 77.8 percent, a rate that is 0.1 percentage point below its 1972-2004 average.

Revision of Industrial Production and Capacity Utilization

On November 7, 2005, the Federal Reserve Board issued its annual revision to the index of industrial production (IP) and the related measures of capacity and capacity utilization. The base year for the indexes of industrial production, capacity, and electric power use was advanced to 2002.

The revisions to the IP index were principally derived from the inclusion of information contained in annual reports issued by the Census Bureau--namely, the 2003 Annual Survey of Manufactures, the revised data from the 2002 Census of Manufactures, and selected 2004 Current Industrial Reports. Annual data on minerals (except fuels) for 2003 and 2004 from the U.S. Geological Survey and updated deflators from the Bureau of Economic Analysis were also introduced. The updating also included revisions to the monthly indicator for each industry (either physical product data or production-worker hours) and revisions to seasonal factors.

The Federal Reserve discontinued its use of survey data of industrial electric power use in the industrial production index. The Federal Reserve is proposing to discontinue the survey itself; the period for public comment on the proposal ends November 28, 2005.

Capacity and capacity utilization were revised to incorporate data from the Census Bureau�s 2004 Survey of Plant Capacity, which covers manufacturing, along with new data on capacity from the U.S. Geological Survey, the U.S. Department of Energy, and other organizations.

The revision is available on the Board�s website at www.federalreserve.gov/releases/G17. The revised data are also available through the website of the Department of Commerce. Further information on these revisions is available from the Board�s Industrial Output Section (telephone 202-452-3197).

NOTE: The statistics in this release cover output, capacity, and capacity utilization in the industrial sector, which the Federal Reserve defines as manufacturing, mining, and electric and gas utilities. Manufacturing comprises those industries included in the North American Industry Classification System, or NAICS, manufacturing plus the logging and newspaper, periodical, book and directory publishing industries that have traditionally been considered manufacturing and included in the industrial sector.

G.17 Release Tables:

Ascii	Screen reader	Summary: Industrial Production and Capacity Utilization
Chart		Chart 1: Industrial Production, Capacity, and Capacity Utilization
Chart		Chart 2: Industrial Production and Capacity Utilization
Chart		Chart 3: Industrial Production and Capacity Utilization, High Technology Industries
Ascii	Screen reader	Table 1: Industrial Production: Market and Industry Groups (percent change)
Ascii	Screen reader	Table 2: Industrial Production: Special Aggregates and Selected Detail (percent change)
Ascii	Screen reader	Table 3: Motor Vehicle Assemblies
Ascii	Screen reader	Table 4: Industrial Production Indexes: Market and Industry Group Summary
Ascii	Screen reader	Table 5: Industrial Production Indexes: Special Aggregates
Ascii	Screen reader	Table 6: Diffusion Indexes of Industrial Production
Ascii	Screen reader	Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities
Ascii	Screen reader	Table 8: Industrial Capacity: Manufacturing, Mining, and Utilities (percent change)
Ascii	Screen reader	Table 9: Industrial Production: Gross Value of Products and Nonindustrial Supplies
Ascii	Screen reader	Table 10: Gross-Value-Weighted Industrial Production: Stage-of-Process Groups
Ascii	Screen reader	Table 11: Electric Power Use: Manufacturing and Mining
Ascii	Screen reader	Table 12: Historical Statistics for IP, Capacity, and Utilization: Total Industry
Ascii	Screen reader	Table 13: Historical Statistics for IP, Capacity, and Utilization: Manufacturing
Ascii	Screen reader	Table 14: Historical Statistics for IP, Capacity, and Utilization: Total Industry excluding Selected High-Technology Industries
Ascii	Screen reader	Table 15: Historical Statistics for IP, Capacity, and Utilization: Manufacturing excluding Selected High-Technology Industries

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Supplemental Monthly Release   Other formats: ASCII | PDF (144 KB)
Annual Revision Release   Other formats: ASCII | PDF (150 KB)

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