News From Bloomberg

Bloomberg News

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

By Editor: Alex Tanzi

March 16, 2012

Industrial production was unchanged in February after having risen 0.4 percent in January. Previously, industrial production was reported to have been unchanged in January. Manufacturing output moved up 0.3 percent in February. Within manufacturing, the index for motor vehicles and parts fell 1.1 percent after jumping 8.6 percent in January, but the index for manufacturing excluding motor vehicles and parts increased 0.4 percent in February. Production at mines fell 1.2 percent, while the output of utilities was unchanged. At 96.2 percent of its 2007 average, total industrial production for February was 4.0 percent above its year-earlier level. Capacity utilization for total industry edged down to 78.7 percent, a rate 1.2 percentage points above its level from a year earlier but 1.6 percentage points below its long-run (1972-2011) average.

Market Groups

The production of consumer goods was unchanged in February. The index for durable consumer goods decreased 0.5 percent, as declines in the output of automotive products and of appliances, furniture, and carpeting were only partly offset by gains in the production of both home electronics and miscellaneous goods. The production of nondurable consumer goods edged up 0.1 percent. The index for consumer energy products rose 0.6 percent, with small gains in both fuels and residential utilities. The output of non-energy nondurable consumer goods was steady, as a step-up for foods and tobacco was offset by lower output for clothing, chemical products, and paper products.

In February, the production of business equipment rose 0.6 percent and was 10.8 percent above its year-earlier level. The index for information processing equipment moved up 1.0 percent last month for its third consecutive gain of 1 percent or more. The production of transit equipment increased 0.9 percent; over the 12 months ending in February, this index advanced 24.4 percent, with large gains in the output of trucks, civilian aircraft, railroad rolling stock, and miscellaneous transportation equipment. The output of industrial and other equipment increased 0.2 percent in February, its seventh consecutive monthly rise.

The index for defense and space equipment advanced 1.1 percent in February following a gain of 0.8 percent in January.

The production of construction supplies rose 1.1 percent in February. This index has advanced 7.5 percent over the past 12 months but nevertheless remained more than 20 percent below its level preceding the recession. The index for business supplies moved up 0.2 percent in February after a similarly sized gain in January.

The output of materials to be further processed in the industrial sector moved down 0.3 percent in February. The index for durable materials was up 0.5 percent after having advanced 1 percent or more in each of the three previous months. Among the major categories of durable materials, both equipment parts and other durable materials rose in February, but consumer parts fell. The production of nondurable materials decreased 0.3 percent, with losses in chemical materials partly offset by increases for both textile and paper materials. The output index for energy materials fell 0.9 percent, its third consecutive monthly decline.

Industry Groups

Manufacturing output increased 0.3 percent in February to a level that was 5.1 percent higher than a year earlier. Production rose 1.1 percent in January, 0.4 percentage point more than reported previously; higher output of food, transportation equipment, and primary metals contributed importantly to the revision. The factory operating rate moved up 0.1 percentage point in February to 77.4 percent, a rate 13.0 percentage points above its trough in June 2009 but still 1.5 percentage points below its long-run average.

Within manufacturing, the output of durable goods increased 0.4 percent in February and was 8.5 percent above its year- earlier level. Output gains of more than 1 percent were recorded in February for nonmetallic mineral products; fabricated metal products; aerospace and miscellaneous transportation equipment; and electrical equipment, appliances, and components. Production declined in February for primary metals, machinery, and motor vehicles and parts; each of these indexes had risen briskly in January.

The production of nondurable goods edged up 0.1 percent in February. Among the major components of nondurables, the indexes for petroleum and coal products and for plastics and rubber products posted the largest increases. Production also rose for food, beverage, and tobacco products; textile and product mills; and paper. The only major indexes that posted declines were for apparel and leather and for chemicals. The index for other manufacturing (non-NAICS), which consists of publishing and logging, moved down 0.3 percent.

Mining production decreased 1.2 percent in February, as the extraction of natural gas declined for a second consecutive month and coal production fell. Capacity utilization in mining decreased to 90.5 percent but was still 3.1 percentage points above its long-run average. The output of utilities was unchanged, in part as temperatures in February stayed mild following an unseasonably warm January. The operating rate for utilities in February decreased to 74.3 percent, a rate 12.1 percentage points below its long-run average.

Capacity utilization rates in February at industries grouped by stage of process were as follows: At the crude stage, utilization declined 1.0 percentage point to 89.1 percent, a rate 2.7 percentage points above its long-run average; at the primary and semifinished stages, utilization increased 0.2 percentage point to 75.2 percent, a rate 5.9 percentage points below its long-run average; and at the finished stage, utilization was steady at 78.4 percent, a rate 1.1 percentage points above its long-run average.

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 at noon EDT 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.