January 2020 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) declined 0.3% in January (-0.3% expected), as unseasonably warm weather held down the output of utilities and as a major manufacturer significantly slowed production of civilian aircraft. The index for manufacturing edged down 0.1% in January; excluding the production of aircraft and parts, factory output advanced 0.3%. The index for mining rose 1.2%. At 109.2% of its 2012 average, total industrial production was 0.8% lower in January than it was a year earlier. 

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Industry Groups

Manufacturing output decreased 0.1% in January to a level 0.8% below its year-earlier reading (NAICS manufacturing: -0.1% MoM; -0.7% YoY). The production of durable goods moved down 0.5% in January, as drops for aerospace and miscellaneous transportation equipment and for machinery were partially offset by a gain for motor vehicles and parts (wood products: +0.3%). The output of nondurable manufacturing rose 0.3%, and almost all of its component categories posted gains (paper products: +0.5%). The indexes for petroleum and coal products and for plastics and rubber products recorded increases of more than 1%, whereas only the index for apparel and leather recorded a decrease of more than 1%.

Mining output advanced 1.2% in January and stood 3.1% above its level of a year earlier. The output of utilities fell 4.0% in January, with electric and natural gas utilities posting declines of 3.2% and 7.7%, respectively. 

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Capacity utilization (CU) for the industrial sector fell 0.3 percentage point (PP) in January to 76.8%, a rate that is 3.0PP below its long-run (1972–2019) average.

Manufacturing CU edged down 0.1PP in January to 75.1%, 3.1PP below its long-run average (NAICS manufacturing: -0.2%, at 75.6%; wood products: +0.1%; paper products: +0.5%). The utilization rate for mining rose to 90.7% and remained well above its long-run average of 87.2%. The operating rate for utilities fell to 70.6%, a rate that is about 15PP below its long-run average. 

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Capacity at the all-industries level nudged up 0.1% (+2.0 % YoY) to 142.2% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.4% YoY) to 140.3%. Wood products: +0.2% (+4.0% YoY) to 169.5%; 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.