October 2021 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) rose 1.6% in October (+0.9% expected) after falling 1.3% in September; about half of October’s gain reflected a recovery from the effects of Hurricane Ida. Manufacturing output increased 1.2% in October; excluding a large gain in the production of motor vehicles and parts, factory output moved up 0.6%. The output of utilities rose 1.2%, and mining output stepped up 4.1%. At 101.6% of its 2017 average, total IP was 5.1% above its year-earlier level and at its highest reading since December 2019. 

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Industry Groups

In October, manufacturing output rose 1.2%, reaching its highest level since March 2019 (NAICS manufacturing: +1.3% MoM; +4.8% YoY). The indexes for both durable and nondurable goods advanced 1.3%, while the index for other manufacturing (logging and publishing) fell 1.5%. Within durables, the largest increase was posted by motor vehicles and parts, while a strike at a major manufacturer contributed to a decrease of 1.3% for machinery (wood products: +0.6%). Within nondurables, the index for petroleum and coal products moved up 5.0%; gains of more than 1% were also recorded by printing and support and by chemicals (paper: -0.2%).

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Capacity utilization (CU) for the industrial sector increased 1.2 percentage points (PP) to 76.4%; even so, it was still 3.2PP below its long-run (1972–2020) average.

Manufacturing CU increased 0.9PP in October to 76.7%, its highest rate since January 2019 (NAICS manufacturing: +1.3%, to 77.1%; wood products: +0.6%; paper products: -0.3%). The operating rate for mining jumped 3.1PP to 76.9%, while the operating rate for utilities rose 0.8PP to 73.8%. The rates for all three sectors remained below their long-run averages.

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Capacity at the all-industries level increased by 0.1% MoM (+0.3% YoY) to 133.1% of 2017 output. NAICS manufacturing edged up less than 0.1% (+0.2% YoY) at 130.6%. Wood products: 0.0% (+0.3% YoY) at 123.2%; paper products: +0.1% (+0.7% YoY) to 113.8%.

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.