May 2022 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) moved up 0.2% in May (+0.4% expected). Output has increased in every month of the year so far, with an average monthly gain of nearly 0.8%. In May, manufacturing output declined 0.1% after three months when growth averaged nearly 1%; the indexes for utilities and mining rose 1.0% and 1.3%, respectively, in May. At 105.7% of its 2017 average, total IP in May was 5.8% above its year-earlier level.

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Industry Groups

Manufacturing output slipped 0.1% in May; even so, the index has advanced 4.8% over the past 12 months (NAICS manufacturing: -0.1% MoM; +4.9% YoY). In May, the index for nondurable manufacturing moved up 0.1%, while the indexes for durable manufacturing and for other manufacturing (publishing and logging) each moved down 0.2%. Among durables, the largest drops were in wood products (-2.6%) and machinery (-2.1%). Among nondurables, an increase of 2.5% in petroleum and coal products outweighed decreases of less than 1% in food, beverage, and tobacco products; paper (-0.3%); and printing and support.

May was the third consecutive month with gains of more than 1.0% in mining; over that period, the index for oil and gas extraction has averaged increases of 2.0% per month. Mining output has advanced 9.0% over the past 12 months. Unseasonably warm weather in May boosted the demand for air conditioning and lowered the demand for heating; the output of electric utilities gained 1.9%, while the output of natural gas utilities stepped back 4.5%.

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Capacity utilization (CU) edged up to 79.0%, 0.5 percentage point (PP) below its long-run (1972–2021) average.

Manufacturing CU edged down in May to 79.1%, 1.0PP above its long-run average (NAICS manufacturing: -0.1%, to 79.3%; wood products: -2.8%; paper: -0.2%). The operating rate for mining was 81.5% (4.4PP below its long-run average), while the operating rate for utilities was 76.4% (8.4PP below its long-run average).

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Capacity at the all-industries level increased by 0.1% MoM (+0.8% YoY) to 133.8% of 2017 output. NAICS manufacturing also edged up by less than 0.0% (+0.5% YoY) to 131.0%. Wood products: +0.2% (+1.0% YoY) to 124.3%; paper: -0.1% (+0.2% YoY) to 113.5%.

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.