November 2015 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) declined 0.6% (-0.2% expected) in November after decreasing 0.4% in October. In November, manufacturing production was unchanged from October. The index for utilities dropped 4.3%, as unusually warm weather held down the demand for heating. The index for mining fell 1.1%, largely attributable to sizable declines for coal mining and for oil and gas well drilling and servicing. At 106.5% of its 2012 average, total IP was 1.2% below its year-earlier level.

As mentioned above, manufacturing output was unchanged (+0.1% expected), as the output of nondurable goods gained 0.5%, but the production of durable goods declined 0.2% and the index for other manufacturing industries (publishing and logging) moved down 1.7%. Most nondurable goods industries recorded increases, with the largest gain posted by the food, beverage, and tobacco products category. Among durable goods industries, losses of 1.0% or more were recorded by primary metals; electrical equipment, appliances, and components; and motor vehicles and parts. Wood Products output was unchanged (+1.4% YoY) while Paper rose by 0.2% (-1.5% YoY).

The production of nonmetallic mineral products increased 1.2% for the largest gain among durables. Mining output declined 1.1% in November and was 8.2% below its year-earlier level, with the index for oil and gas well drilling and servicing at less than half of its year-earlier level. 

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Capacity utilization (CU) for the industrial sector declined 0.5 percentage point (-0.7%) in November to 77.0% (77.4% expected), a rate that is 3.1 percentage points below its long-run (1972–2014) average. Manufacturing CU edged down to 76.2%, a rate 2.3 percentage points below its long-run average. The operating rate for durable goods manufacturing moved down 0.3 percentage point, while the operating rate for nondurable goods manufacturing moved up 0.4 percentage point. Wood Products CU dipped 0.2% (-1.0% YoY) to 70.8%; Paper advanced 0.2% (-1.1% YoY) to 82.6%.

Utilization for other manufacturing (publishing and logging) decreased 0.9 percentage point. The operating rate for mines dropped 1.1 percentage points to 79.4%, while capacity utilization for utilities fell 3.4 percentage points to 74.5%. 

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Capacity at the all-industries and manufacturing levels moved higher -- All-industries: +0.1% (+1.5% YoY) to 138.4% of 2012 output; Manufacturing: +0.1% (+1.3% YoY) to 139.1%. Wood Products extended the upward trend that has been ongoing since November 2013 when increasing by 0.2% (+2.5% YoY) to 160.4%. Paper was unchanged (-0.3% 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.