May 2021 Industrial Production, Capacity Utilization and Capacity

Click image for larger version

Total industrial production (IP) increased 0.8% in May (+0.6% expected). Manufacturing production advanced 0.9%, reflecting, in part, a large gain in motor vehicle assemblies; factory output excluding motor vehicles and parts increased 0.5%. The indexes for mining and utilities rose 1.2% and 0.2%, respectively.

In May, at 99.9% of its 2017 average, total IP was 16.3% higher than it was a year earlier but 1.4% lower than its pre-pandemic (February 2020) level. 

Click image for larger version

Click image for larger version

Industry Groups

Manufacturing output advanced 0.9% in May. The index for durable manufacturing (including wood products: -0.8%) stepped up 1.0%, with the bulk of the increase resulting from a gain of 6.7% for motor vehicles and parts. Overall vehicle assemblies jumped about 1 million units to 9.9 million units (annual rate); even so, they remained more than 1 million units below their average level in the second half of 2020, as production continued to be hampered by shortages of semiconductors. The index for nondurables rose 0.8%; nearly all of its components posted gains (paper products: -1.6%). Advances of more than 2% were recorded by apparel and leather, by printing and support, and by chemicals. The improvement in chemicals chiefly reflected the reopening of some additional petrochemical plants that had been out of commission due to damage from the frigid conditions in February. The output of other manufacturing (publishing and logging) increased 0.8%.

Click image for larger version

Capacity utilization (CU) for the industrial sector rose 0.6 percentage point (PP) in May to 75.2%, a rate that is 4.4PP below its long-run (1972–2020) average.

Manufacturing CU increased 0.9% in May to 75.8% (wood products: -0.8%; paper products: -1.6%). The operating rate for mining increased 0.9PP to 75.2%, while the operating rate for utilities was unchanged at 72.8%. The rates for all three sectors remained below their long-run averages.

Click image for larger version

Capacity at the all-industries level was unchanged MoM (0.0% YoY) at 132.7% of 2017 output. Manufacturing was also unchanged (-0.2% YoY) at 130.3%. Wood products: 0.0% (+0.5% YoY) at 123.1%; paper products: +0.1% (-0.1% YoY) to 113.3%.

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.