April 2018 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) rose 0.7% in April (+0.6% expected) for its third consecutive monthly increase. The rates of change for IP for previous months were revised downward, on net, by 1 percentage point (PP); for 1Q2018, output is now reported to have advanced 2.3% at an annual rate (previously 4.5%). After being unchanged in March, manufacturing output rose 0.5% in April. The indexes for mining and utilities moved up 1.1% and 1.9%, respectively. At 107.3% of its 2012 average, total IP in April was 3.5% higher than it was a year earlier. 

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Industry Groups

Manufacturing output moved up 0.5% in April; for 1Q, the index registered a downwardly revised increase of 1.4% at an annual rate (previously 3.1%). The indexes for durables and nondurables each gained about 0.5%, while the production of other manufacturing industries (publishing and logging) rose nearly 1%. Among durables, advances of more than 1% were posted by machinery; computer and electronic products; electrical equipment, appliances, and components; and aerospace and miscellaneous transportation equipment. The largest losses, slightly more than 1%, were recorded by motor vehicles and parts and by wood products (-1.2%). The increase in nondurables reflected widespread gains among its industries (paper products: +0.4%).

The output of mining rose 1.1% in April and was 10.6% above its year-earlier level. The increase in the mining index reflected further gains in the oil and gas sector but was tempered by a drop in coal mining. Meanwhile, the index for utilities advanced 1.9%. The output of electric utilities was little changed, but the output of gas utilities jumped more than 10% as a result of strong demand for heating due to below-normal temperatures. 

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Capacity utilization (CU) for the industrial sector climbed 0.4PP (+0.6%) to 78.0%, a rate that is 1.8PP below its long-run (1972–2017) average.

Manufacturing CU rose to 75.8%, a rate that is 2.5PP below its long-run average. Increases were observed in all three main categories of manufacturing. The operating rates for durables and nondurables each moved up about 0.25PP (wood products: -1.5%; paper products: +0.4%), and the rate for other manufacturing rose about 0.75PP. Utilization for mining rose about 0.5PP and remained above its long-run average; the rate for utilities jumped more than 1PP. 

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Capacity at the all-industries level nudged up 0.2% (+1.1 % YoY) to 137.6% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.1% YoY) to 137.6%. Wood products: +0.3% (+1.8% YoY) to 160.0%; paper products: 0.0% (0.0% YoY) to 111.3%.

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.