June 2022 Industrial Production, Capacity Utilization and Capacity

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In the wake of annual revisions, total industrial production (IP) was shown to have moved down 0.2% in June (+0.1% expected) but advanced at an annual rate of 6.1% for 2Q as a whole. Manufacturing output declined 0.5% for a second consecutive month in June; even so, it rose at an annual rate of 4.2% in 2Q. In June, the index for mining advanced 1.7%, while the index for utilities fell 1.4%. At 104.4% of its 2017 average, total industrial production in June was 4.2% above its year-earlier level. 

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Industry Groups

Manufacturing output fell 0.5% in June, with decreases for durable and nondurable manufacturing of 0.3% and 0.8%, respectively. Within durable manufacturing, declines of more than 1% in primary metals, machinery, and motor vehicles and parts outweighed gains of more than 1% in miscellaneous manufacturing and in electrical equipment, appliances, and components (wood products: +0.7%). Within nondurable manufacturing, every group except for two posted a decline of at least 0.8%; apparel and leather recorded a gain of 2.5%, while chemicals registered a dip of 0.1% (paper: -0.8%). The index for other manufacturing (publishing and logging) moved down 0.2%.

The output of mining gained 1.7% in June and rose at an annual rate of 14.5% in 2Q; strength in the oil and gas sector has been the primary impetus for the recent gains in mining. The index for utilities fell 1.4% in June but grew at an annual rate of 5.1% in 2Q.

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Capacity utilization (CU) decreased 0.3 percentage point (PP) in June to 80.0%, a rate that is 0.4PP above its long-run (1972–2021) average.

Manufacturing CU fell 0.5PP in June to 79.3%, 1.1PP above its long-run average (wood products: +0.7%; paper: -0.7%). The operating rate for mining jumped 1.2PP to 88.0%, 5.3PP above its year-earlier level and 1.7PP above its long-run average. Conversely, the operating rate for utilities fell 1.2PP to 75.8%, 8.9PP below its long-run average.

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Capacity at the all-industries level increased by 0.2% MoM (+1.1% YoY) to 130.4% of 2017 output. Manufacturing edged up by 0.1% (+0.8% YoY) to 128.7%. Wood products: +0.1% (+1.6% YoY) to 126.2%; paper: -0.1% (-0.1% YoY) to 110.3%.

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.