October 2022 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) decreased 0.1% in October (+0.2% expected), and its gain in September was revised down to 0.1% (originally +0.4%). Manufacturing output edged up 0.1% in October, and its increases in July, August, and September were all lower than previously reported. In October, the index for mining stepped down 0.4%, and the index for utilities fell 1.5%. At 104.7% of its 2017 average, total IP in October was 3.3% above its year-earlier reading. 

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Market Groups

The major market groups recorded mixed results in October. Gains were registered by consumer goods, business equipment, and defense and space equipment, while losses were posted by construction supplies and materials. The index for business supplies was unchanged. Within consumer goods, the largest increases were in automotive products and in appliances, furniture, and carpeting products; the rise in business equipment was broad based. The cutback in materials resulted from widespread decreases among nondurable materials and from a drop in energy materials concentrated in oil and natural gas extraction and in electricity generation; the output of durable materials moved up modestly.

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Industry Groups

Manufacturing output moved up 0.1% in October and was 2.4% above its year-earlier level (NAICS manufacturing: +0.2% MoM; +2.7% YoY). The index for durable manufacturing rose 0.5%, the index for nondurable manufacturing fell 0.3%, and the index for other manufacturing (publishing and logging) was unchanged. Within durables, increases of at least 1.5% were recorded by electrical equipment, appliances, and components; aerospace and miscellaneous transportation equipment; and motor vehicles and parts (wood products: -2.5%). Within nondurables, gains for printing and support, plastics and rubber products, and apparel and leather products were outweighed by losses elsewhere, especially for petroleum and coal products, textile and product mills, and paper (-0.8%).

Mining output declined 0.4% in October: A drop in oil and gas extraction outweighed improvements in oil and gas well drilling and in coal mining. The output for utilities fell 1.5%, as a decrease for electric utilities more than offset an increase for natural gas utilities.

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Capacity utilization (CU) decreased 0.2 percentage point (PP) in October to 79.9%, a rate that is 0.3PP above its long-run (1972–2021) average.

Manufacturing CU was unchanged in October at 79.5%, a rate that is 1.3PP above its long-run average (wood products: -2.6%; paper: -0.7%). The operating rate for mining fell 0.5PP to 88.4%, while the operating rate for utilities declined 1.2PP to 72.1%. Capacity utilization for mining was 2.1PP above its long-run average, but the rate for utilities remained substantially below its long-run average of 84.7%.

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Capacity at the all-industries level increased by 0.1% MoM (+1.6% YoY) to 131.1% of 2017 output. Manufacturing also edged up by 0.1% (+1.1% YoY) to 129.3%. Wood products: less than +0.1% (+1.1% YoY) to 126.5%; paper: -0.1% (-0.5% YoY) to 110.0%.

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.