April 2019 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) fell 0.5% in April (0.0% expected), and the rates of change for six previous months were revised down on net. Output is now reported to have declined 1.9% at an annual rate in 1Q. Manufacturing production moved down 0.5% in April (+0.1% expected) after being unchanged in March. The index for mining advanced 1.6% in April, while the index for utilities fell 3.5%. At 109.2% of its 2012 average, total industrial production was 0.9% higher in April than it was a year earlier. 

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Industry Groups

Manufacturing output declined 0.5% in April after having decreased about 0.4% per month, on average, during the previous three months (NAICS manufacturing: -0.5% MoM; 0.0% YoY). In April, the production of durable goods fell almost 1%, but the index for nondurable goods only edged down. Among durables, losses of 2% or more were posted by machinery; electrical equipment, appliances, and components; and motor vehicles and parts (wood products: +0.2%). Among nondurables, the results were mixed—the largest gains were recorded by apparel and by paper products (+1.2%), and the largest declines were recorded by textile and product mills and by plastics and rubber products. The index for other manufacturing (publishing and logging) declined 0.3% and was well below its year-earlier level.

The output of utilities fell 3.5% in April, with declines in the indexes for both natural gas and electric utilities; demand for heating decreased last month because of temperatures that were warmer than normal. After having fallen for three consecutive months, mining output stepped up 1.6% in April and was 10.4% above its level of a year earlier. The increase in the mining index for April reflected gains in the oil and gas sector as well as a jump in coal mining that followed a few months of declines. 

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Capacity utilization (CU) for the industrial sector decreased 0.6 percentage point (PP) in April to 77.9%, a rate that is 1.9PP below its long-run (1972–2018) average.

Manufacturing CU dropped 0.5PP in April to 75.7%, a rate that is 2.6PP below its long-run average (NAICS manufacturing: -0.6%, to 76.2%). The utilization rate for durable manufacturing declined, while the rates for nondurable manufacturing and for other manufacturing (publishing and logging) were little changed (wood products: -0.1%; paper products: +1.3%). Capacity utilization for mining increased to 91.4% and remained well above its long-run average of 87.1%. The utilization rate for utilities dropped to 76.2% and was more than 9PP below its long-run average. 

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Capacity at the all-industries level nudged up 0.2% (+2.0 % YoY) to 140.1% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.2% YoY) to 138.9%. Wood products: +0.3% (+3.8% YoY) to 164.6%; 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.