November 2017 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) moved up 0.2% in November (+0.3% expected) after posting an upwardly revised increase of 1.2% in October. Manufacturing production also rose 0.2% in November (+0.3% expected), its third consecutive monthly gain. The output of utilities dropped 1.9%. The index for mining increased 2.0%, as oil and gas extraction returned to normal levels after being held down in October by Hurricane Nate. Excluding the post-hurricane rebound in oil and gas extraction, total IP would have been unchanged in November. Total IP was 106.4% of its 2012 average in November and was 3.4% above its year-earlier level. 

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Industry Groups

In November, manufacturing output rose 0.2% and was 2.4% above its year-earlier level. The increase in November reflected a gain of 0.4% for durables. The index for nondurable manufacturing was unchanged, and the index for other manufacturing (publishing and logging) dropped 1.4%. Within durable manufacturing, gains were widespread, with the largest being the advance of 1.7% registered by primary metals (wood products: -0.6%). Among nondurable manufacturing industries, increases for plastics and rubber products and for printing and support were offset by declines for all of the other major industries (paper products: -0.1%).

A gain of 3.0% in oil and gas extraction was the primary contributor to a jump of 2.0% for mining production in November. The index for mining is up 9.4% from its year-earlier level, but it is 8.2% below its peak in December 2014. The index for utilities dropped 1.9%, as a decrease for electric utilities outweighed an increase for natural gas utilities. 

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Capacity utilization (CU) for the industrial sector was 77.1% in November, a rate that is 2.8 percentage points below its long-run (1972–2016) average.

Manufacturing CU edged up to 76.4% in November, its highest reading since May 2008. Utilization for durables increased 0.2 percentage point to 75.9%, and the operating rate for nondurables edged down 0.1 percentage point to 78.0% (wood products: -0.6%; paper products: -0.1%). The operating rate for mines increased 1.5 percentage points to 84.5%, and the rate for utilities decreased 1.4 percentage points to 75.7%. 

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Capacity at the all-industries level nudged up 0.1% (+1.1% YoY) to 137.9% of 2012 output. Manufacturing (NAICS basis) inched up +0.1% (+0.8% YoY) to 137.7%. Wood products: +0.0% (+0.4% YoY) to 156.3%; paper products: 0.0% (-0.3% YoY) to 110.4%.

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.