March 2015 Industrial Production, Capacity Utilization and Capacity

Click image for larger version

Industrial production (IP) decreased 0.6% (-0.3% expected) in March after increasing 0.1% in February. For 1Q2015 as a whole, IP declined at an annual rate of 1.0%, the first quarterly decrease since 2Q2009. The 1Q2015 decline resulted from a drop in oil and gas well drilling and servicing of more than 60% at an annual rate and from a decrease in manufacturing production of 1.2%. In March, manufacturing output moved up 0.1% for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6%, about twice the magnitude of the previously reported decline. The index for mining decreased 0.7% in March. The output of utilities fell 5.9% to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2% of its 2007 average, total industrial production in March was 2.0% above its level of a year earlier. Wood Products and Paper output dropped, respectively, by 1.0% and 0.6%. 

Click image for larger version 

Click image for larger version 

Click image for larger version

Capacity utilization for the industrial sector decreased 0.6 percentage point (0.8%) in March to 78.4%, a rate that is 1.7 percentage points below its long-run (1972-2014) average. Wood Products CU slumped by 1.4% (to 68.2%, its lowest rate since December 2012) while Paper fell by 0.5% (to 82.0%). 

Click image for larger version

Capacity at the all-industries and manufacturing levels moved higher, both by 0.2%, to 134.3% and 132.4%, respectively, of 2007 output. Wood Products extended its ongoing upward trend (since July 2013) when increasing by 0.4% (to 118.0%). Paper, by contrast, contracted by 0.1% to another new low (98.6%). Paper capacity was 2.5% lower in March than a year earlier.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.