November 2016 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) declined 0.4% (-0.2% expected) in November after edging up 0.1% in October. In November, manufacturing output moved down 0.1%, and mining posted a gain of 1.1%. The index for utilities dropped 4.4%, as warmer-than-normal temperatures reduced the demand for heating. At 103.9% of its 2012 average, total IP in November was 0.6% lower than its year-earlier level.

Industry Groups

Manufacturing output edged down 0.1% in November and was just 0.1% above its level of a year earlier. In November, the production of durables decreased 0.3%, the production of nondurables rose 0.3%, and the production of other manufacturing (publishing and logging) fell 0.7%. Among the major durable goods industries, primary metals recorded the largest gain, 2.3%, and motor vehicles and parts registered the largest drop, also 2.3%; wood products: +0.9%. Among nondurables, petroleum and coal products recorded the biggest increase, 3.3%, and a decrease of 1.4% for plastics and rubber products was the biggest loss; paper: -0.1%.

The index for mining advanced 1.1% in November. Most mining industries posted increases, with coal being the notable exception. The output at coal mines dropped 6.8% in November after having climbed nearly 60% between its April trough and October. Nevertheless, the index in November remained about 18% below its level in late 2014. 

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Capacity utilization (CU) for the industrial sector decreased 0.4%age point in November to 75.0%, a rate that is 5.0%age points below its long-run (1972–2015) average.

Capacity utilization for manufacturing edged down 0.1%age point in November to 74.8%, a rate that is 3.7%age points below its long-run average. The operating rate for durables dropped to 75.9% (wood products: +0.5%), the rate for nondurables moved up to 74.7% (paper: 0.0%), and the rate for other manufacturing (publishing and logging) fell to 60.0%. Utilization for mining jumped 1.1%age points to 78.2%; even so, it remained 9.1%age points below its long-run average. The rate for utilities fell 3.5%age points to 74.4%. 

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Capacity at the all-industries level nudged up 0.1% (+0.4% YoY) to 138.5% of 2012 output. Manufacturing (NAICS basis) inched up +0.1% (+0.8% YoY) to 138.0%. Wood products extended the upward trend that has been ongoing since November 2013 when increasing by 0.4% (+4.6% YoY) to 170.0%. Paper edged down 0.1% (-1.2% YoY) to 116.2%.

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.