November 2018 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) rose 0.6% in November (+0.3% expected) after moving down 0.2% in October; the index for October was previously reported to have edged up 0.1%. In November, manufacturing production was unchanged, the output of mining increased 1.7%, and the index for utilities gained 3.3%. At 109.4% of its 2012 average, total IP was 3.9% higher in November than it was a year earlier. 

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Industry Groups

Manufacturing output was unchanged in November, as an increase of 0.2% for durable manufacturing was offset by decreases of 0.2% and 0.9% for nondurable manufacturing and other manufacturing (publishing and logging), respectively. Within durable manufacturing, primary metals posted a gain of nearly 2.5%; no other major industry group recorded a gain of more than 0.5% and several recorded losses (wood products: -0.3%). Among nondurables, most major categories posted declines (paper products: -0.1%).

Mining output advanced 1.7% in November, with gains in oil and gas extraction, coal mining, and support activities for mining; the index for mining was 13.2% above its level of a year earlier. The output of utilities rose 3.3% in November, with increases for both electric and gas utilities; natural gas distribution rose sharply in both October and November, as unseasonably cold weather supported demand for heating. 

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Capacity utilization (CU) for the industrial sector rose 0.4 percentage point (PP) in November to 78.5%, a rate that is 1.3PP below its long-run (1972–2017) average.

Manufacturing CU edged down in November to 75.7%, about 2.5PP below its long-run average (NAICS manufacturing: -0.1%, to 76.3%), as a slight rise for durables (wood products: -0.6%) was outweighed by declines for nondurables (paper products: 0.0%) and other manufacturing (publishing and logging). The utilization rate for mining increased to 94.1% and remained well above its long-run average of 87.0%. The operating rate for utilities moved up to 79.4%, a rate that is about 6PP below its long-run average. 

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Capacity at the all-industries level nudged up 0.2% (+2.0 % YoY) to 139.4% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.5% YoY) to 138.9%. Wood products: +0.3% (+3.5% YoY) to 163.8%; paper products: -0.1% (-0.9 % 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.