Industrial Production and Capacity Utilization

Release Date: August 15, 2002
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INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
[2002 Revision Notice Below]

Industrial production rose 0.2 percent in July, its seventh consecutive monthly increase. At 140.7 percent of its 1992 average, industrial production in July was 2.9 percent above its December 2001 trough. After having posted gains of 0.6 percent in both May and June, manufacturing output edged up 0.1 percent in July. Mining output declined 1.2 percent, a drop that reversed its June increase, and utilities production surged 2.3 percent. The rate of capacity utilization for total industry was 76.1 percent, a rate 5.8 percentage points below its 1967-2001 average.

 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION:  SUMMARY
 Seasonally adjusted
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                    1992=100                     |                  Percent change
                               | ----------------------------------------------- | -------------------------------------------------
                               |       2002                                      |   2002                          |    July '01 to 
 Industrial production         |       Apr.         May        June        July  |   Apr.     May    June    July  |      July '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total index                  |      138.8       139.5       140.4       140.7  |     .1      .5      .7      .2  |             .2 
     Previous estimates        |      138.9       139.5       140.6              |     .2      .4      .8          |                
                               |                                                 |                                 |
  Major market groups:         |                                                 |                                 |
  Products, total              |      127.0       127.2       128.0       128.1  |    -.3      .1      .6      .1  |           -1.6 
     Consumer goods            |      121.4       121.3       122.3       122.7  |    -.3      .0      .9      .3  |             .5 
     Business equipment        |      162.9       163.4       163.7       163.6  |    -.4      .3      .2     -.1  |           -7.1 
     Construction supplies     |      138.3       138.8       139.1       139.0  |   -1.0      .4      .2     -.1  |            1.2 
  Materials                    |      158.8       160.6       161.9       162.3  |     .9     1.2      .8      .2  |            3.2 
                               |                                                 |                                 |
  Major industry groups:       |                                                 |                                 |
  Manufacturing                |      143.4       144.2       145.1       145.2  |     .0      .6      .6      .1  |             .0 
     Durable                   |      177.2       178.4       179.7       180.6  |     .3      .7      .7      .5  |             .4 
     Nondurable                |      110.5       111.1       111.6       111.1  |    -.3      .5      .5     -.5  |            -.4 
  Mining                       |       95.3        96.5        97.7        96.5  |    -.1     1.3     1.2    -1.2  |           -5.3 
  Utilities                    |      123.9       122.7       124.2       127.0  |    1.7    -1.0     1.2     2.3  |            7.5 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                                                   |    Capacity
                               |                                Percent of capacity                                |     growth
                               | --------------------------------------------------------------------------------- | ---------------
                               |     Average        1982     1988-89       2001  |   2002                          |    July '01 to 
 Capacity utilization          |  1967-2001          Low        High       July  |   Apr.     May    June    July  |      July '02 
 -----------------------------------------------------------------------------------------------------------------------------------
                               |                                                 |                                 |
  Total industry               |       81.9        71.1        85.4        76.7  |   75.3    75.6    76.0    76.1  |            1.0 
     Previous estimates        |                                                 |   75.3    75.6    76.1          |                
                               |                                                 |                                 |
  Manufacturing                |       80.9        69.0        85.7        75.1  |   73.6    74.0    74.4    74.4  |             .9 
     Advanced processing       |       80.3        71.0        84.2        75.1  |   72.5    72.5    73.0    72.9  |             .6 
     Primary processing        |       82.0        65.7        88.3        74.9  |   75.4    76.3    76.6    76.7  |            1.5 
  Mining                       |       87.6        80.3        88.0        90.9  |   84.4    85.5    86.5    85.5  |             .7 
  Utilities                    |       87.6        75.9        92.6        86.0  |   87.0    85.8    86.6    88.3  |            4.7 
 -----------------------------------------------------------------------------------------------------------------------------------
 Note:  Estimates for July are preliminary.  Estimates from April to June are revised.

Market Groups

The output of consumer goods rose 0.3 percent in July; a strong gain in the production of durables more than offset a decline in nondurables. A sizable increase for a second month in the output of automotive products was the principal contributor to the 2.5 percent rise in the index for consumer durables. Gains also were posted among appliance manufacturers. Monthly output changes for this industry have been volatile recently, but output has trended upward, on balance, since the end of last year. In contrast, the production of home electronics fell further in July. Output of these goods weakened in the second quarter after rapid increases in the previous two quarters. Consumer nondurables fell 0.3 percent despite a 1.8 percent rise in the output of consumer energy products. Declines among non-energy nondurables, including foods, paper, and chemical products, were widespread. The jump in the output of energy products reflected a pickup in the output of gasoline and a sharp rise in electricity use, which resulted from the unseasonably hot weather.

The index for business equipment edged down in July after having increased in the two previous months. The production of transit equipment moved up, as stronger output of business autos and trucks more than compensated for continued declines in commercial aircraft and related equipment. Nonetheless, the index for transit equipment in July remained nearly 16 percent below its July 2001 level. The output of information processing equipment declined in July, and revised data now indicate that production in this group contracted in the second quarter. The renewed weakness in this sector largely reflects lower output of computers and communications equipment. After a cumulative gain of about 2-1/4 percent over the May and June period, the output of industrial and other equipment fell 0.6 percent in July. Swings in the production of farm machinery and construction equipment have dominated the recent monthly changes in this group. The output of defense and space equipment, which has been on an upswing since last fall, was little changed in July.

The output of construction supplies, which posted sizable gains during the first half of this year, decreased 0.1 percent in July. The production of business supplies was unchanged in July. Declines in the output of job printing, paper business supplies, and other general business supplies were entirely offset by a weather-related increase in the production of commercial energy products.

The production of industrial materials rose 0.2 percent in July, its seventh consecutive monthly increase. Gains in motor vehicle parts and related supplies, steel, and semiconductors have been the key contributors to the rise in the index for durable materials. The output of nondurable materials declined in June and July, with weakness in paper, textiles, and chemicals. The output of energy materials moved up 0.6 percent as a jump in electricity generation more than offset declines in coal, crude oil, and natural gas extraction.

Industry Groups

Manufacturing output rose 0.1 percent in July and was unchanged from its level of July 2001. The output of motor vehicles and parts rose 4.2 percent in July after a 2.8 percent increase in June. However, excluding motor vehicles, manufacturing output declined 0.3 percent in July. An increase of 0.5 percent in the production of durables in July reflected the strong output of motor vehicles and related parts and materials. The rise in durables is the seventh consecutive monthly increase. The production of iron and steel, which continued to trend upward, rose to a level 4.1 percent above its July 2001 level. The output of semiconductors and related equipment also continued its upward trend; it has risen about 25 percent over the same twelve-month period, although recent monthly gains have been more moderate than those posted earlier this year. Elsewhere among durables, the gains in the output of industrial machinery and computer equipment slowed in the second quarter, and output fell in July. The production of aerospace and miscellaneous transportation equipment fell further. The output of nondurables reversed its June increase and was little changed from a year ago.

The factory operating rate remained at 74.4 percent in July, a rate nearly 6.5 percentage points below its 1967-2001 average. The utilization rates both for primary processing and for advanced processing were essentially unchanged. The utilization rate for the selected high-technology industries fell 0.5 percentage point to return to its April 2002 rate of 63.8 percent. The operating rate for motor vehicles and parts, at 84.7 percent, is the highest it has been since June 2000. The operating rate at mines fell to 85.5 percent, and the rate at utilities rose to 88.3 percent.

Revision of Industrial Production and Capacity Utilization

On November 26, the Federal Reserve Board will publish a revision to the index of industrial production (IP), the related measures of capacity and capacity utilization, and the data on industrial use of electric power. The revised estimates will be classified according to the 2002 North American Industrial Classification System (NAICS); previously, the estimates from 1987 forward were classified according to the 1987 Standard Industrial Classification system (SIC). NAICS changes the SIC system's industry composition of manufacturing. To preserve the continuity of the production, capacity, and utilization rate measures featured in the Federal Reserve's G.17 statistical release, portions of SIC 27 (printing and publishing) and SIC 24 (lumber and products) that are not classified in manufacturing under NAICS will continue to be included in the overall IP index and capacity utilization.

The revised production indexes will be based on annual output measures that are constructed by reclassifying the establishments in historical Censuses of Manufactures and Mineral Industries under NAICS; annual output indexes constructed this way will maximize the reliability and historical consistency of the IP industry detail. Data going back to at least 1972 will be restated using NAICS. The monthly indicators used in current IP will be incorporated into the revised IP indexes as far back as the data will allow.

The updated measures will reflect the incorporation of newly available, more comprehensive source data typical of annual revisions. The updating of source data for IP in the 2002 annual revision will include annual data from the 2000 Annual Survey of Manufactures of the Bureau of the Census and from selected editions of its 2000 and 2001 Current Industrial Reports. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2000 and 2001 will also be introduced. The updating will include revisions to the monthly indicator for each industry (either physical product data, production-worker hours, or electric power usage) and revisions to seasonal factors.

Capacity and capacity utilization will be revised to incorporate preliminary data from the 2001 Survey of Plant Capacity of the Bureau of the Census, which covers manufacturing, along with other new data on capacity from the U.S. Geological Survey, the Department of Energy, and other organizations. The statistics on the industrial use of electric power will incorporate additional information received from utilities for the past few years and will include some data from the 2000 Annual Survey of Manufactures.

Once the revision is published, it will be made available on the Board's web site, www.federalreserve.gov/releases/G17. The revised data will also be available through the web site of the Department of Commerce. Further information on these revisions is available from the Board's Industrial Output Section (telephone 202-452-3197).

Statistical releases

Last update: August 15, 2002, 9:15 AM