November 2022 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) declined 0.2% in November (+0.1% expected). Decreases of 0.6% for manufacturing and 0.7% for mining were partly offset by a rebound of 3.6% for utilities following three months of declines. At 104.5% of its 2017 average, total industrial production in November was 2.5% above its year-earlier reading. 

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Market Groups

Decreases were broad based across market groups with the primary exceptions of consumer energy products, energy materials, and defense and space equipment. The output of consumer durables fell about 2%, led by automotive products, while the output of consumer non-energy nondurables decreased about ½%. The production of business equipment fell 0.8%, reflecting decreases for transit equipment and for industrial and other equipment. The indexes for construction supplies, business supplies, durable materials, and nondurable materials all declined ½% or less.

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Industry Groups

Manufacturing output decreased 0.6% in November but remained 1.2% above its year-earlier level (NAICS manufacturing: -0.6% MoM; +1.4% YoY). The indexes for durable and nondurable manufacturing both declined 0.6%, and the index for other manufacturing (publishing and logging) slipped 0.4%. Within durables, increases were recorded by wood products (+3.6%), by computer and electronic products, and by aerospace and miscellaneous transportation equipment; these gains were outweighed by losses for other industries, particularly for motor vehicles and parts. Within nondurables, most industries registered decreases (paper: -1.0%), with only printing and support posting an increase.

Mining output declined 0.7%. The indexes for oil and gas extraction and for oil and gas well drilling also each fell 0.7%; the decrease for drilling followed more than two years of nearly uninterrupted increases. The output of utilities strengthened 3.6% in November, as a decrease for natural gas utilities partly offset an increase for electric utilities.

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Capacity utilization (CU) moved down 0.2 percentage point (PP) in November to 79.7%, a rate that is 0.1PP above its long-run (1972–2021) average.

Manufacturing CU fell 0.6PP in November to 78.9%, a rate that is 0.7PP above its long-run average (wood products: +3.6%; paper: -1.0%). The operating rate for mining fell 0.7PP to 88.2%, while the operating rate for utilities increased 2.4PP to 74.4%. Capacity utilization for mining was 1.9PP 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 131.2% of 2017 output. Manufacturing also edged up by 0.1% (+1.1% YoY) to 129.4%. Wood products: +0.1% (+1.0% YoY) to 126.5%; paper: -0.1% (-0.5% YoY) to 109.9%.

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.