EconoIndicators

Industrial Production At a Glance

• Industrial Production Index: 112.1
• (Base year 2002, Seasonally Adjusted)
• Monthly Change: Up 0.3%
• Manufacturing Change: Up 0.1%
• Mining Change: Up 0.9%
• Utilities Change: Up 1.9%
• Capacity Utilization: 80.5%
• Long Run Average Capacity Utilization: 81%

Technorati Tags: industrial, production, capacity, utilization, manufacturing, mining, utilities

Industrial Production and Capacity Utilization

Industrial production rose 0.3 percent in March after having dropped 0.7 percent in February. For the
first quarter as a whole, output declined at an annual rate of 0.1 percent after edging up at a rate of 0.4
percent in the fourth quarter of last year. Manufacturing production rose 0.1 percent in March. Factory
output was held down by a large decline in the output of motor vehicles and parts; a shortage of motor
vehicle parts that resulted from a strike at a parts manufacturer idled a number of motor vehicle assembly
plants. Outside of motor vehicles and parts, manufacturing production moved up 0.4 percent after having
fallen 0.5 percent in February. In March, the output of mines increased 0.9 percent, and the output of
utilities advanced 1.9 percent. At 112.1 percent of its 2002 average, total industrial production was
1.6 percent above its year-earlier level. The capacity utilization rate for total industry in March rose
0.2 percentage point, to 80.5 percent.

Market Groups
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The production of consumer goods was unchanged in March; a drop in the production of consumer durables
offset an increase in consumer nondurables. For the first quarter, the output of consumer goods edged up
at an annual rate of 0.2 percent after having fallen at a rate of 2.9 percent in the fourth quarter of last
year. The decline in durable consumer goods in March principally reflected a strike-related drop in
automotive products, though, in addition, the output of miscellaneous consumer durables slipped 0.4
percent. The drop in consumer durables was tempered by gains of more than 1 percent in the output of home
electronics and of appliances, furniture, and carpeting. The output of non-energy nondurables rose 0.9
percent; gains in the production of foods and tobacco and of paper products outweighed a decline in
clothing production, while the production of chemical products was unchanged. The output of consumer
energy goods stepped down 0.4 percent.

The output of business equipment increased 0.6 percent in March and rose at an annual rate of 4.4 percent
in the first quarter after having advanced at a rate of 1.9 percent in the fourth quarter. Increases in
information processing equipment and in industrial and other equipment in March more than offset a decrease
in transit equipment. The index for transit equipment fell 0.5 percent largely as a result of the vehicle
parts strike. The index for civilian aircraft edged up.

The output of defense and space equipment increased 0.2 percent in March after having fallen 0.8 percent
in February.

The output of construction supplies decreased 0.2 percent in March. Production of these goods fell at an
annual rate of 6.8 percent in the first quarter after having dropped at a rate of 7.7 percent in the fourth
quarter of last year. The output of business supplies rose 0.7 percent in March.

The production of materials advanced 0.5 percent in March and nearly reversed its February decline. For
the first quarter, output edged down at an annual rate of 0.3 percent after having advanced at a rate of
3.0 percent in the fourth quarter of last year. Among non-energy materials, durable materials declined 0.3
percent in March. A gain in equipment parts was outweighed by a decrease in consumer parts, which largely
reflected the lower output of motor vehicle parts, and by a decline in other durable materials. The output
of nondurable materials moved up 0.6 percent; increases in paper and in chemical materials more than offset
a decrease in textile materials. The production of energy materials climbed 1.3 percent.

Industry Groups
—————

Manufacturing production edged up 0.1 percent in March after having dropped 0.5 percent in February. For
the first quarter as a whole, manufacturing output decreased at an annual rate of 0.5 percent after having
fallen at a similar pace in the fourth quarter. The factory operating rate edged down 0.1 percentage point
in March, to 78.5 percent, a level 1.2 percentage points below its 1972-2007 average. The production of
durable goods slipped 0.1 percent; excluding motor vehicles and parts, the output of durables advanced 0.7
percent, and gains were widespread across industries. Besides motor vehicles and parts, primary metals and
machinery were the only other durable goods industries that posted declines. The production of nondurables
edged up 0.2 percent. Advances in the output of food, beverage, and tobacco products; textile and product
mills; paper; printing and support; and chemicals outweighed declines in apparel and leather, petroleum and
coal products, and plastics and rubber products. The output of non-NAICS industries (publishing and
logging) rose 0.7 percent.

The output of electric utilities increased 1.6 percent in March, and the output of natural gas utilities
advanced 3.4 percent. The operating rate for utilities moved up 1.4 percentage points, to 85.5 percent, a
level 1.3 percentage points below its 1972-2007 average. Mining production increased 0.9 percent; the
capacity utilization rate for mining rose 0.7 percentage point, to 90.8 percent, a rate 3.3 percentage
points above its long-run average.

Capacity utilization at industries grouped by stage of process changed as follows: For the crude stage,
utilization rose 0.8 percentage point, to 89.8 percent, a rate 3.2 percentage points above its 1972-2007
average; for the primary and semifinished stages, utilization edged down 0.1 percentage point, to 80.1
percent, a rate 2.1 percentage points below its long-run average; and for the finished stage, utilization
moved up 0.2 percentage point, to 77.4 percent, about the same as its long-run average.

Notice

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board issued an annual revision to the indexes of industrial production (IP) and the
related measures of capacity and capacity utilization on March 28, 2008. The revised IP indexes
incorporated data from the 2006 Annual Survey of Manufactures and from selected editions of the 2006
Current Industrial Reports, all from the U.S. Census Bureau. Annual data from the U.S. Geological Survey
regarding metallic and nonmetallic minerals (except fuels) for 2006 were also incorporated. The update
included revisions to the monthly indicator (either product data or input data) and to seasonal factors for
each industry as well as changes in the estimation methods for some series. Any changes to methods for
estimating the output of an industry affected the indexes from 1972 to the present.

Monthly releases now include new or revised indexes for a six-month reporting window, which encompasses
one month of new data and revisions to the previous five months of data. The new longer reporting window
allows the incorporation of additional lagging data before an annual revision. Had a six-month window been
used over the past year, an additional 3 percent to 4 percent of IP would have reflected source data. For
a few indexes, the longer reporting window will cause the latest month of data shown to be as many as five
months earlier than the latest value for aggregate IP; data for detailed production indexes are not shown
in the supplement to the G.17 release until either the underlying data are available or the reporting
window is closed.

Capacity and capacity utilization have been revised to reflect the revised production indexes and to
incorporate data from the Census Bureau’s 2006 Survey of Plant Capacity, which covers manufacturing, along
with new data on capacity from the U.S. Geological Survey, the Department of Energy, and other
organizations.

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Source: Federal Reserve Board