September 2022 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) increased 0.4% in September (+0.1% expected) and 2.9% at an annual rate in 3Q. In September, manufacturing output rose 0.4% after advancing a similar amount in the previous month. The index for mining moved up 0.6%, and the index for utilities fell 0.3%. At 105.2% of its 2017 average, total IP in September was 5.3% above its year-earlier level. 

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Market Groups

Most major market groups posted increases in September: Construction supplies recorded the largest gain (1.1%), while business supplies recorded the only decline (0.2%). Despite increasing for the month of September, the output of consumer goods decreased 0.6% at an annual rate in 3Q, a noticeable slowdown from its rate of change of 3.1% in 2Q. The index for materials rose 0.3% in September and was up 4.0% at an annual rate in 3Q.

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Industry Groups

Manufacturing output moved up 0.4% in September; the index increased 1.9% at an annual rate in 3Q after gaining 3.2% in 2Q. In September, the indexes for durable and nondurable manufacturing rose 0.5% and 0.3%, respectively, while the index for other manufacturing (publishing and logging) fell 0.7%. Within durables, gains of at least 1% were recorded by nonmetallic mineral products, fabricated metal products, computer and electronic products, and motor vehicles and parts (wood products: +0.3%); miscellaneous manufacturing posted the only loss of at least 1%. Within nondurables, declines in paper (-0.9%) and in printing and support were outweighed by gains in food, beverage, and tobacco products; apparel and leather; chemicals; and petroleum and coal products.

Mining output rose 0.6% in September, supported by gains in oil and gas extraction as well as in other mining. The output of utilities declined 0.3%, as a decrease for electric utilities was partly offset by an increase for gas utilities. For 3Q as a whole, the index for mining grew 12.4% and the index for utilities fell 6.5% (annual rates).

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Capacity utilization (CU) moved up 0.2 percentage point (PP) in September to 80.3%, a rate that is 0.7PP above its long-run (1972–2021) average.

Manufacturing CU increased 0.3PP in September to 80.0%, a rate that is 1.8PP above its long-run average (wood products: -0.5%; paper: -0.9%). The operating rate for mining rose 0.4PP to 88.8%, while the operating rate for utilities fell 0.4PP to 72.8%. The rate for mining was 2.5PP above its long-run average, while the rate for utilities remained substantially below its long-run average.

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Capacity at the all-industries level increased by 0.1% MoM (+1.5% YoY) to 130.9% of 2017 output. Manufacturing edged up by 0.1% (+1.0% YoY) to 129.1%. Wood products: less than +0.1% (+1.2% YoY) to 126.4%; paper: -0.1% (-0.4% YoY) to 110.1%.

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.