March 2022 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) advanced 0.9% in March (+0.4% expected) and rose at an annual rate of 8.1% during 1Q. Manufacturing output gained 0.9% in March (+0.6% expected); the output of motor vehicles and parts jumped 7.8%, while factory output elsewhere moved up 0.4%. The index for utilities increased 0.4%, and the index for mining advanced 1.7%. At 104.6% of its 2017 average, total IP in March was 5.5% above its year-earlier level. 

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Industry Groups

Manufacturing output rose 0.9% in March and was 4.9% above its year-earlier level (NAICS manufacturing: +0.9% MoM; +5.2% YoY). For 1Q, factory output advanced at an annual rate of 5.4%. In March, the indexes for durable and nondurable manufacturing increased 1.3% and 0.4%, respectively, while the output of other manufacturing (publishing and logging) moved up 0.2%.

Excluding the large gain in motor vehicles and parts, the output of durable goods increased 0.4% in March, with most industries posting gains; only nonmetallic mineral products, primary metals, and furniture and related products recorded decreases (wood products: +0.4%). Increases were posted by all nondurable goods industries except for textile and product mills, paper (-0.7%), and printing and support; the largest rise (1.1%) was registered by plastics and rubber products.

The gain in utilities reflected an increase of 0.9% for electric utilities, partly offset by a drop of 2.9% for natural gas utilities. Mining output rose for the third consecutive month, boosted by strength in the oil and gas sector; the index for mining advanced at an annual rate of 8.0% in 1Q.

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Capacity utilization (CU) for the industrial sector climbed to 78.3%, a rate that is 1.2 percentage points (PP) below its long-run (1972–2021) average.

Manufacturing CU increased 0.6PP in March to 78.7% (NAICS manufacturing: +0.8%, to 79.0%; wood products: +0.22%; paper: -0.6%). The factory operating rate was above its long-run average of 78.1% for the first time since August 2018. The operating rate for mining jumped 1.2PP to 79.5%, and the operating rate for utilities edged up to 75.1%. Both rates remained well below their long-run averages.

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Capacity at the all-industries level increased by 0.1% MoM (+0.7% YoY) to 133.6% of 2017 output. NAICS manufacturing also edged up by less than 0.1% (+0.5% YoY) to 130.9%. Wood products: +0.2% (+0.7% YoY) to 123.8%; paper: -0.1% (+0.6% 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.