February 2017 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) was unchanged in February (+0.2% expected) following a 0.1 percent decrease in January. In February, manufacturing output moved up 0.5 percent (+0.4% expected) for its sixth consecutive monthly increase. Mining output jumped 2.7 percent, but the index for utilities fell 5.7 percent, as continued unseasonably warm weather further reduced demand for heating. At 104.7 percent of its 2012 average, total IP in February was 0.3 percent above its level of a year earlier.

Industry Groups

Manufacturing output rose 0.5 percent in February for a second consecutive month. Led by advances of more than 1 percent for nonmetallic mineral products, fabricated metal products, and machinery, the production of durables increased 0.6 percent. The electrical equipment, appliance, and component industry and the furniture and related products industry registered the only substantial losses within durables, about 1.5 percent each (wood products: -0.3%). The index for nondurables rose 0.4 percent; gains of more than 1 percent were recorded by paper (+1.4%) and by plastics and rubber products, while the only losses were posted by textile and product mills and by chemicals. The output of other manufacturing (publishing and logging) fell 0.5 percent.

The output of mining jumped 2.7 percent in February, with widespread gains among its components, after moving up 2.2 percent in January. The mining index in February was 1.8 percent higher than its year-earlier level. 

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Capacity utilization (CU) for the industrial sector declined 0.1 percentage point in February to 75.4 percent, a rate that is 4.5 percentage points below its long-run (1972–2016) average.

Manufacturing CU rose 0.3 percentage point in February to 75.6 percent, a rate that is 2.8 percentage points below its long-run average. The operating rate for durables, at 76.7 percent, is 0.2 percentage point below its long-run average (wood products: -0.4%); the rates for nondurables and for other manufacturing (publishing and logging), at 75.4 percent and 60.5 percent, respectively, remain significantly below their long-run averages (paper: +1.5%). Utilization for mining jumped 2.1 percentage points to 80.5 percent but is still well below its long-run average. The operating rate for utilities fell 4.4 percentage points to 70.9 percent, its lowest recorded level. 

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Capacity at the all-industries level nudged up 0.1% (+0.6% YoY) to 138.9% of 2012 output. Manufacturing (NAICS basis) inched up +0.1% (+0.8% YoY) to 138.4%. Wood products: +0.1% (+3.7% YoY) to 170.5%; paper: -0.1% (-1.2% YoY) to 115.9%.

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.