Industrial Production and Capacity Utilization - G.17

Current Release (274 KB PDF) (ASCII)

Industrial production decreased 0.1 percent in December after rising 1.3 percent in November. The decrease in December reflected a sharp drop in the output of utilities, as warmer-than-usual temperatures reduced demand for heating; excluding utilities, industrial production rose 0.7 percent. Manufacturing posted a gain of 0.3 percent for its fourth consecutive monthly increase. The index for mining increased 2.2 percent after falling in the previous two months. At 106.5 percent of its 2007 average, total industrial production in December was 4.9 percent above its level of a year earlier. For the fourth quarter of 2014 as a whole, industrial production advanced at an annual rate of 5.6 percent, with widespread gains among the major market and industry groups. Capacity utilization for the industrial sector decreased 0.3 percentage point in December to 79.7 percent, a rate that is 0.4 percentage point below its long-run (1972–2013) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

Among the major market groups, both consumer goods and business supplies posted decreases of around 1 percent in December as a result of a drop in sales by electric and gas utilities; all of the other major market groups recorded gains. Excluding energy products, the output of consumer nondurables increased 0.4 percent, while the production of consumer durables fell 0.5 percent. The output of construction supplies jumped 1.4 percent, the largest gain among the major market groups. The index for business equipment edged up 0.1 percent, and the index for defense and space equipment moved up 0.4 percent. The production of materials also rose 0.4 percent, with gains in all of its major components. Despite the drop in the output of utilities, the index for energy materials moved up because of an increase in oil and natural gas extraction.

Industry Groups

Manufacturing output rose 0.3 percent in December and at an annual rate of 5.2 percent in the fourth quarter. Manufacturing output in December was 4.9 percent above its level of a year earlier. The production of durable goods increased 0.2 percent in December, and the production of nondurable goods rose 0.4 percent. Among major durable goods industries, primary metals posted the largest increase, 2.2 percent, while computers and electronic products registered a gain of 1.2 percent. The largest declines, of nearly 1 percent or more, were recorded by wood products and by motor vehicles and parts. Production increased for most nondurable goods industries, with the largest advance recorded by apparel and leather; only the plastics and rubber products industry registered a decrease. The production index for other manufacturing industries (publishing and logging) declined 0.3 percent.

The output of mining jumped 2.2 percent in December. Much of the strength reflected increases in oil and gas extraction, but a drop in drilling and well-servicing activity at oil and gas fields tempered the gains.

The capacity utilization rate for manufacturing was unchanged in December at 78.4 percent, a rate 0.3 percentage point below its long-run average. The utilization rate for nondurables increased enough to offset decreases in operating rates for durable goods and other manufacturing (publishing and logging). The utilization rate for mines climbed 1.2 percentage points to 88.8 percent, while the rate for utilities fell 6.1 percentage points to 76.6 percent.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue its annual revision to the indexes of industrial production (IP) and the related measures of capacity utilization in the second quarter of 2015. New annual benchmark data for manufacturing for 2012 and 2013 will be incorporated, as well as other annual data, including information on the mining of metallic and nonmetallic minerals (except fuels). The weights for market-group splits of the industry-level indexes will be updated with information from the 2007 benchmark input-output accounts from the Bureau of Economic Analysis. The updated IP indexes will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series may be changed. Any modifications to the methods for estimating the output of an industry will affect the index from 1972 to the present.

Capacity and capacity utilization will be revised to incorporate data through the fourth quarter of 2014 from the Census Bureau's Quarterly 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.

Return to top