May 2015 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) decreased 0.2% (+0.2% expected) in May. The decline in April (-0.5%) was larger than previously reported (-0.3%). Manufacturing output also fell 0.2% in May and was little changed, on net, from its level in January. In May, the index for mining moved down 0.3% after declining more than 1% per month, on average, in the previous four months. The slower rate of decrease for mining output last month was due in part to a reduced pace of decline in the index for oil and gas well drilling and servicing. The output of utilities increased 0.2% in May. At 105.1% of its 2007 average, total IP in May was 1.4% above its year-earlier level. Wood Products and Paper output fell, respectively, by 0.1% and 0.6%. 

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Capacity utilization for the industrial sector decreased 0.3% in May, to 78.1%, a rate that is 2.0 percentage points below its long-run (1972–2014) average. Wood Products and Paper CU both followed the larger trend by declining, respectively, 0.4% (to 68.5%) and 0.5% (to 83.7%). 

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Capacity at the all-industries and manufacturing levels moved higher: +0.1% (to 134.7% of 2007 output) and +0.1% (to 132.7%), respectively. Wood Products extended its ongoing upward trend (since July 2013) when increasing by 0.3% (to 118.8%). Paper, by contrast, contracted by 0.1% to another new low (98.4%). Wood Products capacity was 4.8% higher than a year earlier; Paper: -2.2%.

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.