March 2019 Industrial Production, Capacity Utilization and Capacity

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After minor revisions to historical data, total industrial production (IP) was shown to have edged down 0.1% in March (+0.4% expected) after edging up 0.1% in February; for 1Q as a whole, the index slipped 0.3% at an annual rate. Manufacturing production was unchanged in March (+0.4% expected) after declining in both January and February. The index for utilities rose 0.2%, while mining output moved down 0.8%. At 110.2% of its 2012 average, total industrial production was 2.8% higher in March than it was a year earlier. 

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Industry Groups

Manufacturing output was unchanged in March and moved down at an annual rate of 1.1% in 1Q (NAICS manufacturing: 0.0% MoM; +1.3%YoY). The output of durables edged down in March. Losses of more than 2% were registered by wood products (-2.2%) and by motor vehicles and parts, while gains of more than 1% were registered by primary metals and by computer and electronic products. The production of nondurables inched up as a result of increases in the indexes for textile and product mills, for petroleum and coal products, and for chemicals (paper products: +0.2%). The index for other manufacturing (publishing and logging) edged down, remaining well below its year-earlier level.

The output of utilities rose 0.2% in March; the output of natural gas utilities climbed nearly 4%, while the output of electric utilities stepped down. Mining output declined 0.8% but remained 10.5% above its level of a year earlier. 

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Capacity utilization (CU) for the industrial sector decreased 0.2 percentage point (PP) in March to 78.8%, a rate that is 1.0PP below its long-run (1972–2018) average.

Manufacturing CU edged down 0.1PP in March to 76.4%, about 2PP below its long-run average (NAICS manufacturing: -0.1%, to 76.9%). The utilization rate for durable manufacturing declined, while capacity utilization rates for nondurable manufacturing and for other manufacturing (publishing and logging) were unchanged (wood products: -2.5%, to 74.6%; paper products: +0.3%, to 86.1%). Capacity utilization for mining decreased to 90.9% but was still above its long-run average of 87.1%. The utilization rate for utilities was unchanged at 79.9% and remained 5½PP below its long-run average. 

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Capacity at the all-industries level nudged up 0.2% (+2.0 % YoY) to 139.9% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.1% YoY) to 138.7%. Wood products: +0.3% (+3.7% YoY) to 164.1%; paper products: 0.0% (-0.8 % YoY) to 109.8%.

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.