August 2015 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) decreased 0.4% in August (-0.2% expected) after increasing 0.9% (originally +0.6%) in July. Upward revisions to mining and utilities were largely responsible for July’s higher estimate; the revision resulted in total IP dropping in August by the greatest amount since August 2012. Manufacturing output fell 0.5% in August primarily because of a large drop in motor vehicles and parts (by the most since January 2009, and to a four-year low) that reversed a substantial portion of the jump in manufacturing during July; production elsewhere in manufacturing was unchanged. The index for mining fell 0.6% in August, while the index for utilities rose 0.6%.

At 107.1% of its 2012 average, total IP in August was 0.9% above its year-earlier level. Wood Products output fell by 0.1% (-1.7% YoY) while Paper rose 0.1% (-1.4% YoY).  

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Capacity utilization (CU) for the industrial sector fell 0.5% in August to 77.6% (-0.7% YoY), a rate that is 2.5 percentage points below its long-run (1972–2014) average. Wood Products CU decreased by 0.3% (-4.0% YoY) to 69.2%; Paper edged up by 0.1% (-0.7% YoY) to 82.2%. 

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Capacity at the all-industries and manufacturing levels moved higher -- All-industries: +0.1% (+1.6% YoY) to 138.0% of 2012 output; Manufacturing: +0.1% (+1.2% YoY) to 138.6%. Wood Products extended the upward trend that has been ongoing since November 2013 when increasing by 0.2% (+2.5% YoY) to 159.5%. Paper was unchanged (-0.7% YoY) at 116.9%.

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.