April 2022 Industrial Production, Capacity Utilization and Capacity

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In April, total industrial production (IP) increased 1.1% (+0.4% expected) -- the fourth consecutive month of gains of 0.8% or greater -- and manufacturing output rose 0.8%. The index for utilities moved up 2.4%, and the index for mining advanced 1.6%. At 105.6% of its 2017 average, total industrial production in April was 6.4% above its year-earlier level. 

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Industry Groups

Manufacturing output rose 0.8% in April and was 5.8% above its year-earlier level (NAICS manufacturing: +0.8% MoM; +6.0% YoY). The indexes for durable and nondurable manufacturing increased 1.1% and 0.3%, respectively, while the output of other manufacturing (publishing and logging) moved up 0.9%. Excluding an increase of 3.9% in the production of motor vehicles and parts, factory output rose 0.5%.

In April, most durable goods industries posted gains (wood products: +1.1%), with only nonmetallic mineral products; electrical equipment, appliances, and components; and furniture and related products recording losses. Within nondurables, only food, beverage, and tobacco products posted a notable increase (0.9%), and only plastics and rubber products posted a notable decrease (0.8%); the indexes for most other industries were little changed (paper: 0.0%).

The gain in utilities in April reflected increases of 2.1% and 4.4%, respectively, for electric utilities and natural gas utilities. Mining output rose more than 1-1/2% for a second consecutive month. The index for mining in April was 8.6% above its year-earlier level but still 3.8% below its pre-pandemic (February 2020) level.

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Capacity utilization (CU) climbed to 79.0%, a rate that is 0.5 percentage point (PP) below its long-run (1972–2021) average.

Manufacturing CU increased 0.6PP in April to 79.2%—the highest level since April 2007—and was above its long-run average by 1.1PP (NAICS manufacturing: +0.7%, to 79.5%; wood products: +0.9%; paper: +0.1%). The operating rate for mining rose 1.1PP to 80.1%, and the operating rate for utilities moved up 1.6PP to 77.0%. 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 133.7% of 2017 output. NAICS manufacturing also edged up by less than 0.0% (+0.5% YoY) to 130.9%. Wood products: +0.2% (+0.8% YoY) to 124.1%; paper: -0.1% (+0.4% YoY) to 113.7%.

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.