EconoIndicators

Industrial Production At a Glance

• Industrial Production Index: 107.3
• (Base year 2002, Seasonally Adjusted)
• Monthly Change: Down 2.8%
• Manufacturing Change: Down 2.6%
• Mining Change: Down 7.8%
• Utilities Change: Up 2.2%
• Capacity Utilization: 76.4%
• Long Run Average Capacity Utilization: 81%

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

Industrial Production and Capacity Utilization

Industrial production dropped 2.8 percent in September, as hurricanes Gustav and Ike and a strike at a
major producer of civilian aircraft severely curtailed output. For the third quarter as a whole,
industrial production decreased at an annual rate of 6.0 percent. Manufacturing production fell 2.6
percent in September. The output of mines plunged 7.8 percent, as crude oil and natural gas operations in
the Gulf of Mexico were suspended because of the hurricanes. The output of utilities rose 2.2 percent, as
temperatures returned to more normal levels in September after a relatively cool August.

The estimated effect of the disruptions from the hurricanes on total industrial production in September is
about 2-1/4 percentage points. In addition to reductions in oil and gas extraction, hurricane-related
shutdowns of petroleum refineries and petrochemical producers factored significantly in the decline; other
manufacturing industries with storm outages made smaller contributions to the drop in output. The strike
in the commercial aircraft industry contributed an estimated 1/2 percentage point to the overall decrease
in industrial production.

At 107.3 percent of its 2002 average, total industrial production in September was 4.5 percent below its
level of a year earlier. The capacity utilization rate for total industry fell to 76.4 percent in
September, a level 4.6 percentage points below its average level from 1972 to 2007.

Market Groups
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The production of consumer goods decreased 1.4 percent in September; durable goods declined 0.7 percent,
while nondurable goods fell 1.5 percent. Consumer durable goods were weighed down by a drop of 3.3 percent
in the production of appliances, furniture, and carpeting and by a decrease of 2.7 percent in the output of
miscellaneous goods. Elsewhere among durable goods, the index for automotive products rose 1.7 percent in
September after having dropped 11.0 percent in August. Among consumer nondurable goods, the index for
consumer energy products tumbled 4.4 percent in September, as lower output at petroleum refineries was
slightly offset by an advance in utilities output. Non-energy consumer nondurable goods weakened 0.3
percent. The indexes for foods and tobacco and for chemical products both moved lower, while the output of
clothing and paper products both edged up.

The output of business equipment dropped 7.0 percent in September. The production of transit equipment
plummeted more than 30 percent because of the work stoppage in civilian aircraft. The index for industrial
and other equipment fell 2.4 percent because of a hurricane-related decline in mining and oil and gas field
machinery and weakness in construction machinery, general purpose machinery, and farm machinery. The index
for information processing equipment edged down 0.1 percent.

The output of defense and space equipment decreased 0.9 percent in September. A large shipbuilding
facility on the Gulf coast was temporarily shut down as a result of the hurricanes, which contributed
significantly to the decline.

Among nonindustrial supplies, the production of construction supplies decreased 1.5 percent after having
fallen 1.0 percent in August. The index of business supplies fell 1.8 percent in September for its fifth
consecutive monthly decrease.

Materials output dropped 3.4 percent. The production of energy materials fell 6.1 percent because of
contractions in natural gas and crude oil. The production of durable materials decreased 1.0 percent. The
index for consumer parts was unchanged after having fallen 6.5 percent in August. The index for equipment
parts moved down 0.9 percent in September; about half of the decline was a result of lower production of
aircraft parts. The output of other durable materials fell 1.3 percent. The production of nondurable
materials moved down 3.3 percent. The shutdowns of petrochemical producers in the Gulf region contributed
significantly to the decrease of 5.8 percent in the index for chemical materials. The index for textile
materials fell 1.0 percent, and the index for paper materials declined 1.3 percent.

Industry Groups
—————

Manufacturing output decreased 2.6 percent in September, and the factory operating rate fell to 74.5
percent, a level more than 5 percentage points below its 1972-2007 average. The production of durable
goods industries fell 2.5 percent, with declines widespread among its components. In addition to a large
drop in aerospace and miscellaneous transportation equipment, production decreased for wood products;
nonmetallic mineral products; primary metals; fabricated metal products; machinery; electrical equipment,
appliances, and components; furniture and related products; and miscellaneous goods. The output of motor
vehicles and parts advanced 1.9 percent after having fallen 11.3 percent in August, while the output of
computer and electronic products was unchanged. The production of nondurable goods decreased 2.9 percent,
with widespread weakness. The output of petroleum and coal products plunged 9.2 percent because of the
storms’ effects on refinery activity. Declines were also recorded in the indexes for food, beverage, and
tobacco products; textile and textile product mills; paper and products; printing; chemicals; and plastics
and rubber products.

The index for other manufacturing (that is, industries formerly considered manufacturing but not
classified as manufacturing under the North American Industry Classification System, or NAICS), which
consists of publishing and logging, edged down 0.2 percent in September after an increase of 0.5 percent in
August.

Capacity utilization rates at industries grouped by stage of process were as follows: For the crude
stage, utilization fell 6.7 percentage points, to 83.7 percent, a rate 2.9 percentage points below its
1972-2007 average; for the primary and semifinished stages, utilization fell 1.3 percentage points, to 76.7
percent, a rate 5.5 percentage points below its long-run average; and for the finished stage, utilization
moved down 1.8 percentage points, to 73.3 percent, a rate 4.4 percentage points below its long-run average.

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 g17 – September 2008 [PDF]

Industrial Production g17 – September 2008 [Text]

Source: Federal Reserve Board