Industrial Production and Capacity Utilization - G.17

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Industrial production increased 0.1 percent in February after decreasing 0.3 percent in January. In February, manufacturing output moved down 0.2 percent, its third consecutive monthly decline. The rates of change for the total index in January and for manufacturing in both December and January are lower than previously reported. The index for mining fell 2.5 percent in February; drops in the indexes for coal mining and for oil and gas well drilling and servicing primarily accounted for the decrease. The output of utilities jumped 7.3 percent, as especially cold temperatures drove up demand for heating. At 105.8 percent of its 2007 average, total industrial production in February was 3.5 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased to 78.9 percent in February, a rate that is 1.2 percentage points below its long-run (1972–2014) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

Among the major market groups, the indexes for consumer goods, for defense and space equipment, and for business supplies registered gains in February, while losses were recorded by business equipment, construction supplies, and materials. The index for consumer goods moved up 1.0 percent, with the increase more than accounted for by a gain of 7.6 percent for consumer energy products, which reflected a jump in sales to consumers by utilities. The output of durable consumer goods dropped 1.4 percent, and the production of non-energy nondurables decreased 0.2 percent. The output of business equipment declined 0.3 percent, with an increase for transit equipment and decreases for information processing equipment and for industrial and other equipment. The index for materials declined 0.2 percent, with a drop of 0.8 percent in the output of durable materials partially offset by small gains for both nondurable materials and energy materials.

Industry Groups

Manufacturing output decreased 0.2 percent in February. The production of durable goods moved down 0.6 percent, with widespread losses among its components, and the production of nondurable goods moved up 0.2 percent. The motor vehicles and parts industry posted a loss of 3.0 percent, the largest decrease among durable goods manufacturers; most other industries moved down more than 0.5 percent. Only the aerospace and miscellaneous transportation equipment industry recorded a significant increase in production, advancing 1.2 percent. Among the major nondurable goods industries, gains in the indexes for textile and product mills, for petroleum and coal products, and for chemicals more than offset losses elsewhere. The production of other manufacturing industries (publishing and logging) moved up 0.5 percent.

The capacity utilization rate for manufacturing decreased 0.3 percentage point in February to 77.3 percent, a rate 1.3 percentage points below its long-run average. The operating rate for durable goods manufacturing moved down 0.7 percentage point to 76.9 percent, just below its long-run average, and the operating rate for nondurable goods manufacturing edged up 0.1 percentage point to 79.5 percent, about 1 percentage point below its long-run average. Utilization for other manufacturing (publishing and logging) increased 0.3 percentage point to 57.5 percent. The operating rate for mines dropped 2.6 percentage points to 84.6 percent, while capacity utilization for utilities increased 5.8 percentage points to 84.5 percent.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity utilization in mid-2015. New annual benchmark data for 2012 and 2013 for manufacturing 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 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.

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