INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
Industrial production rose 0.5 percent in May after revised increases of 0.3 percent in April and 0.4 percent in March. Some of the increase in total industrial production in May resulted from a 2.8 percent surge in the output of utilities and a 1.2 percent jump in the output of mines. After having eased earlier in the year, manufacturing output picked up, rising 0.2 percent in May and 0.5 percent in April. At 128.8 percent of its 1992 average, total industrial production in May was 4.4 percent higher than it was in May 1997. The rate of industrial capacity utilization edged up 0.1 percentage point in May, to 82.2 percent.
The production of consumer goods increased substantially for the third consecutive month, led by a jump in the output of durable goods and of energy products; the production of non-energy nondurable products remained flat. Increases within the durable consumer goods category were widespread. The output of automotive products rose 1.7 percent and was just below the high average level of production attained in the last quarter of 1997. The production of home computing equipment and appliances also posted significant gains. Within the non-energy nondurable consumer goods category, a moderate increase in the output of food and tobacco products was offset by a decrease in the production of clothing; the output of consumer chemicals remained flat.
The output of business equipment increased 0.4 percent, its third straight monthly gain after having slowed earlier in the year. The output of computers and transit equipment increased sharply again. The production of other types of equipment decreased; in particular, the output of industrial equipment retreated to a level somewhat below the high at the end of 1997.
The production of construction supplies increased after two months of decline, but it was still below the high attained in February. The output of materials increased 0.5 percent after some sluggishness in recent months; most of the gain can be explained by a surge in energy materials. In particular, coal production increased sharply and was a bit higher than the record level achieved last December; continuing its volatile behavior of recent months, electricity generation also shot up. Among durable goods materials, the output of parts for consumer goods, which had spiked upward in the fourth quarter, decreased 1.2 percent in May after a substantial decline in the first quarter and a moderate increase in April. The output of equipment parts advanced once more; semiconductors and parts for computers and electronic communication equipment posted the most significant gains. Within nondurable goods materials, the production of textile and paper materials increased after two months of declines, while the production of chemical materials decreased for the fourth consecutive month.
The increase in manufacturing output reflected a third consecutive monthly increase in the production of durable goods, which had declined earlier in the year. Increases among durables were widespread and were led once more by strong growth in the production of computer and office equipment and semiconductors. The production of nondurable goods declined 0.1 percent and was virtually unchanged from its February level. Significant declines in the production of apparel, chemicals, petroleum, rubber and plastic products, and leather products were almost offset by increases in the production of food, tobacco, textiles, and paper.
The operating rate in manufacturing declined 0.2 percentage point, to 80.9 percent. The utilization rate in advanced-processing industries fell back to its March level. The rate for primary-processing industries fell for the fifth consecutive month to its lowest level since October 1993, but it remained above its long-run average.
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