January 2018 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) edged down 0.1% in January (+0.2% expected) following four consecutive monthly increases. Manufacturing production was unchanged in January (+0.2% expected). Mining output fell 1.0%, with all of its major component industries recording declines, while the index for utilities moved up 0.6%. At 107.2% of its 2012 average, total industrial production was 3.7% higher in January than it was a year earlier. 

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Industry Groups

Manufacturing output was unchanged in January for a second consecutive month; the index has increased 1.8% over the past 12 months. Major manufacturing industries recorded a broad mix of gains and losses in January. The production of durables moved up 0.2% (wood products: -1.4%), and the index for nondurables was unchanged (paper products: -0.4%). The output of other manufacturing (publishing and logging) fell 1.4%.

In January, the output of mining declined 1.0% for a second consecutive monthly loss. Even so, the mining index for January was 8.8% higher than its year-earlier level because of strength in the oil and natural gas sector. 

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Capacity utilization (CU) for the industrial sector fell 0.2 percentage point in January to 77.5%, a rate that is 2.3 percentage points below its long-run (1972–2017) average.

Manufacturing CU was unchanged in January at 76.2%, a rate that is 2.1 percentage points below its long-run average. The operating rate for durables, at 76.1%, was less than 1 percentage point below its long-run average, whereas the rates for nondurables and for other manufacturing (publishing and logging), at 77.4% and 60.1%, respectively, were further below their long-run averages of about 80% for each (wood products: -1.7%; paper products: -0.4%). Utilization for mining fell 1.4 percentage points to 84.2%, but the rate for utilities rose 0.3 percentage point to 81.1%. Capacity utilization rates for both mining and utilities remained below their long-run averages. 

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Capacity at the all-industries level nudged up 0.2% (+1.2% YoY) to 138.3% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +0.9% YoY) to 138.0%. Wood products: +0.3% (+0.6% YoY) to 156.8%; paper products: 0.0% (-0.1% 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.