Industrial Production and Capacity Utilization - G.17

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Industrial production decreased 0.4 percent in May after increasing 0.6 percent in April. Declines in the indexes for manufacturing and utilities in May were slightly offset by a small gain for mining. The output of manufacturing moved down 0.4 percent, led by a large step-down in the production of motor vehicles and parts; factory output aside from motor vehicles and parts edged down 0.1 percent. The index for utilities fell 1.0 percent, as a drop in the output of electric utilities was partly offset by a gain for natural gas utilities. After eight straight monthly declines, the production at mines moved up 0.2 percent. At 103.6 percent of its 2012 average, total industrial production in May was 1.4 percent below its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in May to 74.9 percent, a rate that is 5.1 percentage points below its long-run (1972–2015) average.

Industrial Production and Capacity Utilization: Summary

Market Groups

The indexes for nearly all major market groups declined in May. The output of consumer goods moved down 0.7 percent, with declines in each of its major components. After increasing 1.1 percent in April, the production of consumer durables fell 2.2 percent in May as a result of a large decrease for automotive products and smaller decreases for home electronics and for appliances, furniture, and carpeting. The indexes for consumer non-energy nondurables and for consumer energy products decreased 0.1 percent and 0.9 percent, respectively. Business equipment posted a decline of 0.7 percent, with a gain in information processing equipment outweighed by decreases in transit equipment and in industrial and other equipment. The indexes for construction supplies and business supplies each fell 0.3 percent. Industrial materials recorded a dip of 0.2 percent: The indexes for durable materials and for energy materials each decreased 0.4 percent, but the output of nondurable materials moved up a similar amount.

Industry Groups

Manufacturing output fell 0.4 percent in May, and production was little changed from its level of a year earlier. In May, the production of durables declined 0.7 percent, the production of nondurables was little changed, and the production of other manufacturing (publishing and logging) fell 0.6 percent. The largest drop among durable goods, 4.2 percent, was recorded by motor vehicles and parts. In addition, the indexes for wood products and machinery fell 1.0 percent or more. Several durable goods industries posted increases, but miscellaneous manufacturing was the only industry to register a gain of more than 1.0 percent. Within nondurables, increases for food, beverage, and tobacco products and for paper offset declines elsewhere; printing and support activities recorded the largest decrease.

The small increase in mining in May resulted from a rebound in coal mining, which had declined in each of the previous eight months, and a gain in nonmetallic mineral mining. Oil and gas extraction was roughly unchanged in May, but the index for oil and gas well drilling and servicing fell for the 20th consecutive month.

Capacity utilization for manufacturing decreased 0.4 percentage point in May to 74.8 percent, a rate that is 3.7 percentage points below its long-run average. The operating rate for nondurables was unchanged, while the rates for durables and for other manufacturing (publishing and logging) each fell about 1/2 percentage point. The operating rate for mining moved up about 1/2 percentage point, and the rate for utilities dropped about 1 percentage point.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board issued its annual revision to the index of industrial production (IP) and the related measures of capacity utilization on April 1, 2016. New annual benchmark data for 2014 for manufacturing were incorporated, as well as other annual data, including information on the mining of metallic and nonmetallic minerals (except fuels). The updated IP indexes included revisions to monthly indicators (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series were changed. Modifications to the methods for estimating the output of an industry affected the index from 1972 to the present.

Capacity and capacity utilization were revised to incorporate data through the fourth quarter of 2015 from the U.S. Census Bureau's Quarterly Survey of Plant Capacity 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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