EconoIndicators

Industrial Production At a Glance

• Industrial Production Index: 110.3
• (Base year 2002, Seasonally Adjusted)
• Monthly Change: Down 1.1%
• Manufacturing Change: Down 1.0%
• Mining Change: Down 0.4%
• Utilities Change: Down 3.2%
• Capacity Utilization: 78.7%
• Long Run Average Capacity Utilization: 81%

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

FEDERAL RESERVE STATISTICAL RELEASE

G.17 (419) For release at 9:15 a.m. (EDT)
September 15, 2008

Industrial Production and Capacity Utilization

Industrial production decreased 1.1 percent in August and was revised down in June and July to show
smaller gains of 0.2 percent and 0.1 percent respectively. After little movement over the previous three
months, factory output was down 1.0 percent in August, in part because of a drop of 11.9 percent in the
production of motor vehicles and parts. Excluding motor vehicles and parts, the index for manufacturing
decreased 0.3 percent. The output of mines declined 0.4 percent, and the output of utilities fell 3.2
percent, as temperatures in August were unseasonably mild.

Precautionary shutdowns in the Gulf of Mexico in advance of Hurricane Gustav partly curtailed
refinery activity, petrochemical production, and the extraction of crude oil and natural gas; however, the
estimated effect in August of disruptions due to the hurricane on total industrial production is estimated
to have been less than 0.1 percentage point. At 110.3 percent of its 2002 average, total industrial
production was 1.5 percent below its level of a year earlier. The capacity utilization rate for total
industry fell to 78.7 percent, a level 2.3 percentage points below its average level from 1972 to 2007.

Market Groups
————-

Led by a drop of 6.0 percent in consumer durables, the production of consumer goods decreased 2.0
percent in August. Among consumer durables, the production of automotive products tumbled 10.7 percent
after having posted gains in the previous three months. Output declines were also recorded in August in
the other major categories of consumer durable goods: home electronics; appliances, furniture, and
carpeting; and miscellaneous goods. The production of nondurable goods moved down 0.9 percent. The index
for consumer energy products fell 2.8 percent because of lower output at utilities and at petroleum
refineries. Non-energy consumer nondurable goods edged down 0.1 percent. The indexes for clothing and
chemical products both moved lower. The output of foods and tobacco was unchanged, but the production of
paper products moved up 0.3 percent.

The output of business equipment fell 0.6 percent in August after having increased in the previous three
months. The output of transit equipment dropped 4.2 percent as a result of the large decrease in light
vehicle assemblies and a smaller reduction in the output of civilian aircraft. The indexes for information
processing equipment and for industrial and other equipment both posted small gains.

The output of defense and space equipment moved down 0.7 percent but was little changed, on net, from
its level of 12 months earlier.

Among nonindustrial supplies, the production of construction supplies was off 1.0 percent after an
increase of 0.4 percent in July. The index of business supplies moved down 0.6 percent in August for its
fourth consecutive monthly decrease.

Materials output fell 0.9 percent. The production of energy materials was down 1.1 percent; excluding
energy, the index for materials decreased 0.8 percent. The production of durable materials declined 1.2
percent. The index for consumer parts dropped 7.0 percent, largely because of sharp declines in the output
of motor vehicle parts. The index for equipment parts edged down 0.1 percent. An increase in the index
for semiconductors, printed circuit boards, and other equipment was more than offset by decreases
elsewhere. The output of other durable materials fell 0.2 percent after no change in the previous two
months. The production of nondurable materials moved down 0.2 percent. The index for textile materials
rose but was 9.5 percent below its year-earlier level. The index for paper materials fell 0.7 percent, and
the index for chemical materials decreased 0.2 percent.

Industry Groups
—————

Manufacturing output fell 1.0 percent in August, and the factory operating rate moved down to 76.6
percent, a level about 3 percentage points below both its 1972-2007 average and its level of 12 months
earlier. The production of durable goods industries decreased 1.6 percent. In addition to the drop in
motor vehicles and parts, production declines occurred in the output of nonmetallic mineral products;
electrical equipment, appliances, and components; aerospace and miscellaneous transportation equipment; and
furniture and related products. However, the output of primary metals rose 0.4 percent after a sharp drop
in the second quarter, and the indexes for wood products, machinery, and miscellaneous goods posted gains
in August of between 0.3 percent and 0.9 percent. The production indexes for computer and electronic
products and fabricated metal products were about unchanged. The production of nondurable goods fell 0.5
percent. Declines in the indexes for apparel and leather products, paper, petroleum and coal products,
chemicals, and plastics and rubber products more than offset increases in the indexes for food, beverage,
and tobacco products and for printing.

The index for other manufacturing (non-NAICS), which consists of publishing and logging, was down 0.2
percent in August.

The output of electric and gas utilities decreased 3.2 percent, and the operating rate for utilities
dropped 2.9 percentage points, to 81.5 percent. Mining production moved down 0.4 percent, and the
utilization rate fell to 91.3 percent but was 3.8 percentage points above its 1972-2007 average.

Capacity utilization rates at industries grouped by stage of process were as follows: For the crude
stage, utilization declined 0.2 percentage point, to 89.6 percent, a rate 3.0 percentage points above its
1972-2007 average; for the primary and semifinished stages, utilization fell 1.3 percentage points, to 78.1
percent, a rate 4.1 percentage points below its long-run average; and for the finished stage, utilization
moved down 1.0 percentage point, to 75.2 percent, a rate 2.5 percentage points below its long-run average.

Note: Capacity utilization rates for October 2007 through February 2008 have been updated with this
release. In April 2008, a six-month reporting window was instituted for the industrial production indexes
in the G.17 Statistical Release; however, the capacity utilization rates inadvertently continued to be
calculated for only a four-month window. Table 7A shows the revised rates for the affected months. The
data download program and the historical data files on the Federal Reserve Board’s website have been
updated with revised data.

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 late March of 2009. The revised IP indexes will
incorporate data from selected editions of the U.S. Census Bureau’s 2007 Current Industrial Reports.
Detailed data from the 2007 Economic Census, however, are not expected to be available. Annual data from
the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2007 will also be
incorporated. The updating will include 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 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 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 Department of Energy, and other organizations.

Industrial Production – August 2008 [PDF]

Industrial Production – August 2008 [Text]

Source: Federal Reserve Board