January 2021 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) increased 0.9% in January (+0.5% expected). Manufacturing output rose 1.0%, about the same as its average gain over the previous five months. Mining production advanced 2.3%, while the output of utilities declined 1.2%. At 107.2% of its 2012 average, total IP in January was 1.8% lower than its year-earlier level. 

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Industry Groups

Manufacturing output increased 1.0% in January (NAICS manufacturing: +1.0% MoM; -0.8% YoY). Durable and nondurable manufacturing recorded advances of 0.9% and 1.2%, respectively, while other manufacturing (publishing and logging) posted a decrease of 0.8%. Among durables, many sectors experienced gains of between 1 and 2½%. The largest gain, 3.9%, was posted by primary metals, while the only losses were posted by nonmetallic mineral products and by motor vehicles and parts (wood products: +0.9%). The output of motor vehicles was held down by a global shortage of semiconductors used in vehicle components. Most nondurable sectors recorded growth rates in the 1 to 2% range. The only exceptions were the indexes for paper (-0.7%) and for printing and support, which both declined a bit more than ½%.

The output of utilities fell 1.2% in January, largely because of a drop of 5.7% for natural gas utilities. The index for mining jumped 2.3%. Oil and gas well drilling continued its climb with an advance of 11.3%, though it remains about 50% below its year-earlier level. An increase of more than 1% for oil and natural gas extraction also contributed significantly to the gain for mining in January.

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Capacity utilization (CU) for the industrial sector increased 0.7 percentage point (PP) in January to 75.6%, a rate that is 4.0% below its long-run (1972–2020) average.

Manufacturing CU increased 0.7PP in January to a rate 14.5PP higher than its trough in April and less than 1PP below its pre-pandemic level (NAICS manufacturing: +1.0% MoM, to 75.2%; wood products: +0.8% MoM; paper products: -0.8% MoM). The operating rate for mining rose 2.0PP to 82.2%, while the operating rate for utilities dropped 1.1PP to 73.5%; both rates remained below their long-run averages.

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Capacity at the all-industries level was essentially unchanged MoM (+0.0 % YoY) at 141.9% of 2012 output. Manufacturing (NAICS basis) was also unchanged (-0.1% YoY) at 140.0%. Wood products: +0.1% (+0.4% YoY) at 169.9%; paper products: +0.1% (-0.7% YoY) to 108.9%.

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.