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

Following is the text of the U.S. Industrial Production and Capacity Utilization report for January:

Industrial production was unchanged in January, as a gain of 0.7 percent in manufacturing was offset by declines in mining and utilities. Within manufacturing, the index for motor vehicles and parts jumped 6.8 percent and the index for other manufacturing industries increased 0.3 percent. The output of utilities fell 2.5 percent, as demand for heating was held down by temperatures that moved further above seasonal norms; the output of mines declined 1.8 percent. Total industrial production is now reported to have advanced 1.0 percent in December; the initial estimate had been an increase of 0.4 percent. This large upward revision reflected higher output for many manufacturing and mining industries. At 95.9 percent of its 2007 average, total industrial production in January was 3.4 percent above its level of a year earlier. The capacity utilization rate for total industry decreased to 78.5 percent, a rate 1.8 percentage points below its long-run (1972-2011) average.

Market Groups

The production of consumer goods edged down 0.1 percent in January. The index for consumer durables increased 3.8 percent, but the index for consumer nondurables declined 1.2 percent. Among durables, the production of automotive products climbed 5.8 percent, and gains were also recorded for home electronics; appliances, furniture, and carpeting; and miscellaneous goods. Among consumer nondurables, the output of non-energy goods decreased 0.1 percent, as a decline in foods and tobacco offset gains in clothing, chemical products, and paper products. The output of consumer energy products fell 4.0 percent, with substantial decreases for both residential utilities and fuels.

The production of business equipment moved up 1.8 percent in January with appreciable increases in all of its major component indexes: Transit equipment advanced 2.5 percent, information processing equipment increased 1.8 percent, and industrial and other equipment gained 1.5 percent. The output of business equipment has risen in each of the past 9 months and in January stood nearly 11 percent above its level 12 months earlier.

The production of defense and space equipment increased 0.8 percent in January following a decline of 0.6 percent in December.

Among nonindustrial supplies, the output of construction supplies fell 0.4 percent in January following a gain of 3.0 percent in December. In January, the output of construction supplies was 5.3 percent above its level of a year earlier but remained well below its pre-recession peak. The production of business supplies increased 0.5 percent in January.

The production of materials moved down 0.4 percent in January after having risen 1.0 percent in December. A decrease of 1.7 percent for energy materials, which primarily reflected lower output by utilities and reductions in oil and natural gas extraction, more than accounted for the decline in overall materials. The index for durable materials advanced 0.8 percent because of increases in the production of consumer parts and equipment parts; the index for other durable materials decreased 0.3 percent. The production of nondurable materials edged up 0.1 percent; the output of both textile and paper materials increased, while the production of chemical materials declined.

Industry Groups

Manufacturing output rose 0.7 percent in January after having increased 1.5 percent in December; the level of output in January was 4.5 percent above its year-earlier level. Capacity utilization for manufacturing moved up 0.5 percentage point to 77.0 percent, a rate 1.9 percentage points below its long-run average.

The production of durable goods advanced 1.8 percent in January. The output of motor vehicles and parts surged 6.8 percent following an upwardly revised increase of 3.8 percent in December. In January, gains of more than 1.0 percent were recorded for fabricated metal products; machinery; computer and electronic products; electrical equipment, appliances, and components; furniture and related products; and miscellaneous manufacturing. The output of aerospace and miscellaneous transportation equipment edged up 0.1 percent, while production decreased for wood products, nonmetallic mineral products, and primary metals.

Nondurable manufacturing declined 0.2 percent in January after having advanced 1.5 percent in December. The decrease in production in January reflected drops in output for food, beverage, and tobacco products and for petroleum and coal products. The production indexes for apparel and leather products and for printing and support moved up more than 1 percent, while the indexes for textile and product mills, for paper, for chemicals, and for plastics and rubber products recorded smaller increases. The output of non-NAICS manufacturing industries (publishing and logging) decreased 0.1 percent.

In January, mining output fell 1.8 percent, its first decline since February 2011; capacity utilization decreased to 91.5 percent, a rate 4.1 percentage points above its long-run average. The output of utilities declined 2.5 percent after having fallen a similar amount in December. The operating rate for utilities dropped to 74.6 percent in January.

Capacity utilization rates in January at industries grouped by stage of process were as follows: At the crude stage, utilization fell 1.0 percentage point to 89.9 percent, a rate 3.5 percentage points above its long-run average; at the primary and semifinished stages, utilization decreased 0.4 percentage point to 74.9 percent, a rate 6.2 percentage points below its long-run average; and at the finished stage, utilization increased 0.8 percentage point to 78.1 percent, a rate 0.8 percentage point above its long-run average.

Note: Preliminary Estimates of Industrial Capacity

The data in this release include preliminary estimates of industrial capacity for 2012. Measured fourth quarter to fourth quarter, total industrial capacity is projected to rise 1.0 percent this year after having increased 1.1 percent in 2011. Manufacturing capacity is estimated to advance 0.9 percent in 2012 after having gained 0.8 percent in 2011. Mining capacity is estimated to rise 1.1 percent in 2012 after having moved up 2.1 percent in 2011, and capacity at electric and natural gas utilities is projected to expand 2.4 percent this year, which is 0.4 percentage point faster than the increase recorded last year. These estimates will be updated with the publication on March 30, 2012, 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 30, 2012. The revised IP indexes will incorporate detailed data from the 2010 Annual Survey of Manufactures, conducted by the U.S. Census Bureau. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2010 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 data through the fourth quarter of 2011 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 (telephone number 202-452-3197).

References and Release Dates

References

The release for the annual revision that was published on March 25, 2011 is available on the Board’s website (www.federal reserve.gov/releases/g17/revisions/Current/DefaultRev.htm). A summary of the annual revision that incorporated back to 1972 production and capacity indexes reclassified according to the North American Industry Classification System is available in an article in the Federal Reserve Bulletin, vol. 89 (April 2003), pp. 151-176. A description of the aggregation methods for industrial production and capacity utilization is included in an article in the Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. The Federal Reserve methodology for constructing industry-level measures of capital is detailed in “Capital Stock Estimates for Manufacturing Industries: Methods and Data” by Mike Mohr and Charles Gilbert (1996), which can be obtained at: www.federalreserve.gov/releases/g17/CapitalStockDocLatest.pdf.

Industrial Production-1986 Edition contains a more detailed description of the other methods used to compile the industrial production index, plus a history of its development, a glossary of terms, and a bibliography. The major revisions to the IP indexes and capacity utilization since 1990 have been described in the Federal Reserve Bulletin (April 1990, June 1990, June 1993, March 1994, January 1995, January 1996, February 1997, February 1998, January 1999, March 2000, March 2001, March 2002, April 2003, Winter 2004, Winter 2005, March 2006, May 2007, August 2008, August 2009) or in an on-line staff study (www.federalreserve.gov/releases/g17/articles/rev2010/industrial 10.pdf).

Release Schedule At 9:15 a.m. on

2012: January 18, February 15, March 16, April 17, May 16, June 15, July 17, August 15, September 14, October 16, November 16, and December 14.

http://www.federalreserve.gov/releases/g17