April 2021 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) increased 0.7% in April (+1.2% expected). The indexes for mining and utilities increased 0.7% and 2.6%, respectively; the index for manufacturing rose 0.4% despite a drop in motor vehicle assemblies that principally resulted from shortages of semiconductors. An important contributor to the gain in factory output was the return to operation of plants that were damaged by February's severe weather in the south central region of the country and had remained offline in March. The weather-induced drop in total IP in February and the subsequent rebound in March are now estimated to have been larger than reported last month.

At 106.3% of its 2012 average in April, total industrial production has moved up 16.5% from its level in April 2020 (the trough of the pandemic), but it was 2.7% below its pre-pandemic (February 2020) level. 

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Industry Groups

Manufacturing output rose 0.4% in April (NAICS manufacturing: +0.4% MoM; +23.3% YoY), with decreases of 0.4% and 1.1% for durable and other manufacturing (publishing and logging), respectively, outweighed by an increase of 1.3% for nondurable manufacturing. The index for motor vehicles and parts fell 4.3%; excluding the motor vehicle sector, factory output advanced 0.7%, primarily reflecting a further recovery in chemicals as additional factories that had sustained weather-related damage during February reopened. Elsewhere, industry results were mixed, with supply chain difficulties possibly hindering production (wood products: +0.2%). Among nondurables, most major industry categories recorded gains, but paper products (-0.1%), printing and support, and plastics and rubber products recorded modest losses.

The output of utilities moved up 2.6% in April after dropping substantially in March, when unseasonably warm weather reduced demand for heating. Mining production increased 0.7% in April; the index fell more than 9% in February because of the winter storm and recovered much of that loss in March.

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Capacity utilization (CU) for the industrial sector rose 0.5 percentage point (PP) in April to 74.9%, a rate that is 4.7PP below its long-run (1972–2020) average.

Manufacturing CU increased 0.3PP in April to 74.1% (NAICS manufacturing: +0.4% MoM, to 74.7%; wood products: +0.2%; paper products: -0.1%). The operating rates for mining and utilities rose 0.7PP and 1.7 PP, respectively. The rates for all three sectors remained below their long-run averages.

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Capacity at the all-industries level was unchanged MoM (-0.1 % YoY) at 142.0% of 2012 output. Manufacturing (NAICS basis) was also unchanged (-0.1% YoY) at 140.1%. Wood products: +0.1% (+0.4% YoY) to 170.2%; paper products: +0.1% (-0.3% YoY) at 109.1%.

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.