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Tuesday, November 17, 2015

October 2015 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) declined 0.2% in October (+0.1% expected) after decreasing the same amount in September. In October, the index for manufacturing moved up 0.4%, while the index for mining fell 1.5% and the index for utilities dropped 2.5%. For 3Q as a whole, total IP is now estimated to have increased at an annual rate of 2.6% instead of the previously reported +1.8%. At 107.2% of its 2012 average, total IP in October was 0.3% above its year-earlier level. Wood Products output jumped 1.9% (-0.4% YoY) while Paper edged up 0.1% (-0.9% YoY).
Manufacturing output increased 0.4% (+0.3% expected), as the output of durable goods advanced 0.5% and the production of nondurable goods rose 0.3%. Nearly all major categories of durable goods industries moved up, and gains of 1.0% or more were recorded by nonmetallic mineral products; electrical equipment, appliances, and components; and primary metals. Among nondurable goods industries, the index for textile and product mills gained 1.9% and the index for petroleum and coal products rose 1.3%, but the index for apparel and leather fell 2.6%. The output of other manufacturing (publishing and logging) fell 0.6% after having dropped a similar amount in each of the previous two months.
The decline of 1.5% in mining output in October reflected sizable reductions both in the indexes for crude oil extraction and for oil and gas well drilling and servicing. Mining output was 6.9% below its level of a year earlier. The index for utilities dropped 2.5%; a decrease for electric utilities was partly offset by an increase for natural gas utilities. 
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Capacity utilization (CU) for the industrial sector declined 0.2 percentage point (-0.3%) in October to 77.5%, a rate that is 2.6 percentage points below its long-run (1972–2014) average. Wood Products CU rose 1.7% (-2.8% YoY) to 69.9%; Paper nudged up 0.1% (-0.5% YoY) to 82.6%.
The capacity utilization rate for manufacturing rose 0.2 percentage point to 76.4%, a rate 2.1 percentage points below its long-run average. The capacity utilization rate for durable goods industries, at 76.2%, was 0.7 percentage point below its long-run average; the rate for nondurable goods industries, at 77.9%, was 2.5 percentage points below its long-run average. The operating rate for other manufacturing (publishing and logging) decreased 0.3 percentage point in October, to 60.2%. The utilization rate for mines fell 1.4 percentage points to 80.5%, and the rate for utilities decreased 2.1 percentage points to 77.8%. 
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Capacity at the all-industries and manufacturing levels moved higher -- All-industries: +0.1% (+1.5% YoY) to 138.3% of 2012 output; Manufacturing: +0.1% (+1.3% YoY) to 138.9%. Wood Products extended the upward trend that has been ongoing since November 2013 when increasing by 0.2% (+2.5% YoY) to 160.1%. Paper was unchanged (-0.4% 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.

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