Industrial production decreases 0.2%

Source: Board of Governors of the Federal Reserve System

Nov 08, 2010

Industrial production decreased 0.2% in September after having increased 0.2% in August. The indexes both for manufacturing and for manufacturing excluding motor vehicles and parts also moved down 0.2% in September. Production at mines moved up 0.7%, while the output of utilities fell 1.9%. For the third quarter as a whole, total industrial production rose at an annual rate of 4.8% after having advanced about 7% in both the first and second quarters of this year. The index for manufacturing decelerated sharply in the third quarter: After having jumped at an annual rate of 9.1% in the second quarter, factory output gained 3.6% in the third quarter. At 93.2% of its 2007 average, total industrial production in September was 5.4% above its year-earlier level. The capacity utilization rate for total industry edged down to 74.7%, a rate 4.2 percentage points above the rate from a year earlier but 5.9 percentage points below its average from 1972 to 2009.

The output of consumer goods declined 0.4% in September. The index for consumer durables decreased 0.9%. Within durables, the output of automotive products fell 1.0%, the index for appliances, furniture, and carpeting dropped 1.9% after a similarly sized decline in August, and the production of miscellaneous goods declined for a second consecutive month. The output of home electronics rose 0.6%. The production of nondurable consumer goods moved down 0.2%; a fall of 1.9% in the energy category, which primarily resulted from a decrease in the index for residential utilities, more than offset an increase in the non-energy category. Within non-energy nondurables, the indexes for foods and tobacco and for clothing moved up, while the indexes for chemical products and for paper products moved down. The output of consumer goods increased faster in the third quarter than in the second quarter, a pickup that reflected unusually strong summer sales by utilities and a jump in the output of consumer automotive products.

The output of business equipment edged up 0.1% in September and was 10.1% above its year-earlier level. The index for transit equipment advanced 1.8% and offset a decline in the production of information processing equipment; the output of industrial and other equipment was unchanged. For the third quarter, the output of business equipment rose at an annual rate of 9.8%. This increase was slower than in the second quarter due to substantial decelerations in the indexes for information processing equipment and for industrial and other equipment. In contrast, the output of transit equipment jumped at an annual rate of 33.4% in the third quarter after having fallen the previous two quarters.

The index for defense and space equipment declined 0.2% in September after a 0.5% decrease in August.

The production of construction supplies retreated 0.8% in September after having advanced 1.1% in August. The index for business supplies decreased 0.9% in September, with declines in both the energy and non-energy categories.

In September, the production of materials was unchanged from August. A decrease in the output of durable materials offset increases in the indexes for nondurable materials and for energy materials. The decrease in durable materials was its first decline since June 2009, and the indexes for all of its major categories moved down. For the third quarter as a whole, the output of materials rose 4.9%, somewhat less than the 7.5% advance recorded in the second quarter; relative to the second quarter, slower increases in durable materials more than offset faster gains for nondurable materials and for energy materials.

Production in manufacturing moved down 0.2% in September, and the factory operating rate edged down to 72.2%, a rate 7.0 percentage points below its 1972 to 2009 average. The output of durable goods declined 0.2% in September, with decreases in most major categories, including a 0.7% decrease in the output of machinery. Production for only two major components of durables advanced: The indexes for motor vehicles and parts and for miscellaneous manufacturing each rose 0.5%.

The index for nondurable goods moved up 0.1% in September after having risen 0.9% in August. Food, beverage, and tobacco products posted the largest increase, and the indexes for apparel and leather, for paper, and for chemicals also rose. Categories that recorded declines included printing, petroleum and coal products, and plastics and rubber products. The index for other manufacturing (non-NAICS), which consists of publishing and logging, fell 1.7%.

Mining production moved up 0.7% in September, and the utilization rate rose to 87.8%, a rate 0.4 percentage point above its 1972 to 2009 average. The index for utilities fell 1.9%; the output of both electric and gas utilities declined for a second consecutive month. The operating rate for utilities fell 1.5 percentage points, to 79.4%.

Capacity utilization rates at industries grouped by stage of process were as follows: For the crude stage, the operating rate increased 0.7 percentage point, to 86.9%, a rate that was 0.4 percentage point above its 1972 to 2009 average; for the primary and semifinished stages, utilization declined 0.6 percentage point, to 71.5%, a rate 10.1 percentage points below its long-run average; and for the finished stage, utilization decreased 0.1 percentage point, to 73.8%, a rate 3.7 percentage points below its long-run average.