February 2020 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) rose 0.6% in February (+0.4% expected) after falling by a revised 0.5% in January (originally -0.3%). Manufacturing output edged up 0.1% in February; excluding a large gain for motor vehicles and parts and a large drop for civilian aircraft, factory output was unchanged. The index for mining declined 1.5%, but the index for utilities jumped 7.1%, as temperatures returned to more typical levels following an unseasonably warm January. At 109.6% of its 2012 average, the level of total IP in February was unchanged from a year earlier. 

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Industry Groups

Manufacturing output edged up 0.1% in February, but was still 0.4% below its level of a year earlier (NAICS manufacturing: +0.1% MoM; -0.2% YoY). The output of durable goods increased 0.3%. Among the components of durables, motor vehicle and parts recorded the largest gain, while aerospace and miscellaneous transportation equipment recorded the largest decline (wood products: +0.5%). The output of nondurable manufacturing slipped 0.1% as its components posted mixed results. Sizable declines were posted by textile and product mills, by petroleum and coal products, and by chemicals. Sizable gains were posted by food, beverage, and tobacco products; by apparel and leather; and by printing and support (paper products: +0.6%). The output of other manufacturing (publishing and logging) declined 1.0% and was 9.0% below its year-earlier level.

Mining output fell 1.5% in February, reflecting broad-based declines among its components; even so, overall mining production was 2.1% above its year-earlier level. The output of utilities jumped 7.1% in February, with electric and natural gas utilities each posting large gains. 

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Capacity utilization (CU) for the industrial sector increased 0.4 percentage point (PP) in February to 77.0%, a rate that is 2.8PP below its long-run (1972–2019) average.

Manufacturing CU in February was 75.0%, unchanged from its rate in January but 3.2PP below its long-run average (NAICS manufacturing: 0.0%, at 75.6%; wood products: +0.2%; paper products: +0.6%). The utilization rate for mining fell to 88.4%, but it was 1.2PP above its long-run average. The operating rate for utilities advanced to 75.8%, a rate that is 9.4PP below its long-run average. 

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Capacity at the all-industries level nudged up 0.1% (+2.0 % YoY) to 142.4% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.4% YoY) to 140.4%. Wood products: +0.2% (+3.9% YoY) to 169.9%; paper products: 0.0% (-0.2 % 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.