U.S. January Industrial Production and Capacity Report (Text)

Following is the text of the U.S. industrial production and capacity utilization report for Jan. released by the Federal Reserve.

Industrial Production and Capacity Utilization

Industrial production decreased 0.1 percent in January 2011 after having risen 1.2 percent in December. In the manufacturing sector, output increased 0.3 percent in January after an upwardly revised gain of 0.9 percent in December. Excluding motor vehicles and parts, factory production rose 0.1 percent in January. The output of utilities fell 1.6 percent in January, as temperatures moved closer to normal after unseasonably cold weather boosted the demand for heating in December; the output of utilities advanced 4.1 percent in that month. In January, the output of mines declined 0.7 percent. At 95.1 percent of its 2007 average, total industrial production in January was 5.2 percent above its level of a year earlier. The capacity utilization rate for total industry edged down to 76.1 percent, a rate 4.4 percentage points below its average from 1972 to 2010.

Market Groups -------------

The production of consumer goods increased 0.1 percent in January. The index for consumer durables advanced 1.4 percent, and the index for consumer nondurables declined 0.3 percent. Within durables, the production of automotive products rose 3.0 percent and the output of miscellaneous consumer durables gained 0.6 percent, but the index for home electronics decreased 0.8 percent and the index for appliances, furniture, and carpeting fell 1.0 percent. Among consumer nondurables, the output of non-energy goods rose 0.2 percent, as solid gains in clothing, chemical products, and paper products were partly offset by a decline in the production of foods and tobacco products. The output of consumer energy products fell 2.0 percent in January after having risen 5.4 percent in December. The decline in energy production in January reflected drops both in the production of fuels and in residential sales by electric and natural gas utilities.

The output of business equipment rose 0.9 percent in January, and all of its major component indexes increased: Transit equipment advanced 1.2 percent, information processing equipment increased 0.6 percent, and industrial and other equipment gained 1.0 percent. The output of business equipment has risen in each of the past 11 months and in January stood 11.4 percent above its level 12 months earlier.

The production of defense and space equipment moved up 1.2 percent in January after having declined, on balance, over the previous four months.

Within nonindustrial supplies, the output of construction supplies fell 0.2 percent in January, but it was 7.2 percent above its year-earlier level. The production of business supplies declined 0.3 percent; a decrease in the output of commercial energy products more than accounted for the loss.

The production of materials fell 0.4 percent in January after having risen 1.5 percent in December. A decline of 0.6 percent in nondurable materials and a decrease of 1.0 percent in energy materials were partially offset by an increase of 0.5 percent in durable materials. The gains in durable materials were widespread across its major components. Among nondurables, the index for chemical materials, which jumped 3.2 percent in December, fell 0.9 percent in January, and the indexes for textile materials and paper materials each recorded smaller declines.

Industry Groups ---------------

Manufacturing output rose 0.3 percent in January after having increased 0.9 percent in December; the level of output in January was 5.5 percent above its year-earlier level. Capacity utilization for manufacturing was 73.7 percent, a rate 5.4 percentage points below its average for the period from 1972 to 2010.

The output of durable goods moved up 0.6 percent in January. A large gain was recorded in the index for motor vehicles and parts; smaller increases were recorded for many other industries, including fabricated metal products, machinery, computer and electronic products, aerospace and miscellaneous transportation equipment, furniture and related products, and miscellaneous manufacturing. Output decreased for wood products; nonmetallic mineral products; primary metals; and electrical equipment, appliances, and components.

Nondurable manufacturing declined 0.1 percent in January after having advanced 1.0 percent in December. The decline in production in January reflected decreases for food, beverage, and tobacco products; textile and product mills; printing and support products; and petroleum and coal products. The production of apparel and leather products moved up more than 1 percent, and the output indexes for paper, for chemicals, and for plastics and rubber products recorded smaller increases. The index for non- NAICS manufacturing industries, which comprises publishing and logging, rose 0.3 percent.

In January, mining output fell 0.7 percent, and capacity utilization declined to 88.1 percent, a rate 0.7 percentage point above its 1972-2010 average. After a sizable increase in December, the output of utilities dropped 1.6 percent in January, as production declined in both electric and natural gas utilities. The utilization rate for utilities fell to 81.2 percent.

Capacity utilization rates in January at industries grouped by stage of process were as follows: At the crude stage, utilization fell 0.8 percentage point to 88.6 percent, a rate 2.2 percentage points above its 1972-2010 average; at the primary and semifinished stages, utilization declined 0.3 percentage point to 73.2 percent, a rate 8.1 percentage points below its long-run average; and at the finished stage, utilization increased 0.3 percentage point to 74.7 percent, a rate 2.7 percentage points below its long-run average.

Note: Preliminary Estimates of Industrial Capacity

The data in this release include preliminary estimates of industrial capacity for 2011. Measured fourth quarter to fourth quarter, total industrial capacity is projected to rise 1.2 percent this year after having declined 0.3 percent in 2010. Manufacturing capacity is estimated to increase 0.7 percent in 2011 following decreases of 0.2 percent last year and 1.2 percent in 2009. Mining capacity is estimated to rise 2.0 percent in 2011 after having been unchanged in 2010, and utilities capacity is projected to expand 3.6 percent this year, which is 2.1 percentage points faster than the rate of expansion recorded last year. These estimates will be updated with the publication on March 25, 2011, of the annual revision to industrial production, capacity, and capacity utilization. Notice 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 on March 25, 2011. The revised IP indexes will incorporate detailed data from the 2009 Annual Survey of Manufactures, conducted by the U.S. Census Bureau. Data from selected editions of the Census Bureau’s 2009 Current Industrial Reports and annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2009 will also be incorporated. The update will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series may be changed. Any modifications 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 additional 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.

Once the revision is published, it will be available on the Board’s website at www.federalreserve.gov/releases/G17. Further information on the revision can be obtained from the Board’s Industrial Output Section

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