November 2019 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) and manufacturing production both rebounded 1.1% (+0.9% expected for total IP) in November after declining in October. These sharp November increases were largely due to a bounceback in the output of motor vehicles and parts following the end of a strike at a major manufacturer. Excluding motor vehicles and parts, the indexes for total industrial production and for manufacturing moved up 0.5% and 0.3%, respectively. Mining production edged down 0.2%, while the output of utilities increased 2.9%.

At 109.7% of its 2012 average, total industrial production was 0.8% lower in November than it was a year earlier. 

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Industry Groups

Manufacturing output rose 1.1% in November (NAICS manufacturing: +1.1% MoM; -0.7% YoY) after having been held down in September and October by the strike in the motor vehicle industry. An increase of 2.2% for durables primarily reflected a jump of 12.4% for motor vehicles and parts, but even excluding motor vehicles and parts, the output of durables moved up 0.6%. The indexes for primary metals and for computer and electronic products advanced 1% or more, while the indexes for nonmetallic mineral products, furniture and related products, and machinery declined modestly (wood products: +0.3%). The production of nondurables edged up 0.1%, as increases for plastics and rubber products and for food, beverages, and tobacco products were mostly offset by decreases for petroleum and coal products, for chemicals, and for apparel and leather (paper products: +0.1%). The output of other manufacturing (publishing and logging) fell 1.9%.

Mining output slipped 0.2% in November following a larger decrease in October. Declines in drilling and related support activities for oil and gas wells have weighed down the index for mining for several months. 

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Capacity utilization (CU) for the industrial sector increased 0.7 percentage point (PP) in November to 77.3%, a rate that is 2.5PP below its long-run (1972–2018) average.

Manufacturing CU increased 0.7PP in November to 75.2%, a rate that is 3.1PP below its long-run average (NAICS manufacturing: +1.0%, to 75.7%). The operating rate for durables rose 1.5PP, while the rate for nondurables edged down 0.1PP (wood products: -0.1%; paper products: +0.1%). The utilization rate for mining moved down to 88.6% yet was still 1.5PP higher than its long-run average. The rate for utilities increased 2.1PP but remained well below its long-run average. 

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Capacity at the all-industries level nudged up 0.2% (+2.1 % YoY) to 141.9% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.4% YoY) to 140.1%. Wood products: +0.3% (+4.1% YoY) to 168.6%; paper products: 0.0% (-0.3 % YoY) to 109.7%.

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.