February 2023 Industrial Production, Capacity Utilization and Capacity

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After revision of January’s estimate from unchanged to +0.3%, total industrial production (IP) was unchanged in February (+0.4% expected), and manufacturing output edged up 0.1%. The index for mining fell 0.6%, while the index for utilities rose 0.5%. At 102.6% of its 2017 average, total IP in February was 0.2% below its year-earlier level -- the first year-over-year decline since February 2021. 

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Market Groups

The major market groups posted mixed results in February. Gains were recorded by consumer goods, defense and space equipment, and materials, while losses were recorded by business equipment, construction supplies, and business supplies. Defense and space equipment registered the largest increase (1.2%), while construction supplies registered the largest decrease (0.5%). Within consumer goods, the index for consumer durables fell primarily as a result of a drop for automotive products, the index for non-energy nondurables was unchanged, and the index for consumer energy products moved up. Within materials, the indexes for both durable and nondurable materials increased modestly, while the index for energy materials declined slightly for its fifth consecutive monthly decrease.

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Industry Groups

Manufacturing output increased 0.1% in February but was 1.0% below its year-earlier level (NAICS manufacturing: +0.1% MoM; -0.9% YoY). In February, the indexes for durable manufacturing and nondurable manufacturing moved up 0.1% and 0.2%, respectively, while the index for other manufacturing (publishing and logging) fell 1.5%. Within durables, computer and electronic products recorded the largest gain (1.2%), while nonmetallic mineral products recorded the largest loss (0.5%). Within nondurables, decreases of at least 1% were registered by textile and product mills and by plastics and rubber products; only chemicals recorded an increase of more than 1%. Wood products: +1.1%; paper products: -0.9%.

Mining output fell 0.6% in February; the indexes for oil and gas extraction, for mining except oil and gas, and for support activities all decreased. The output of utilities rose 0.5%, with increases for both electric and natural gas utilities.

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Capacity utilization was unchanged in February at 78.0%, a rate that is 1.6 percentage points (PP) below its long-run (1972–2022) average.

Manufacturing CU slipped 0.1PP in February to 77.6%, a rate that is 0.6PP below its long-run average (NAICS manufacturing: 0.0% MoM; wood products: +1.0%; paper: -0.8%). The operating rate for mining fell 0.6PP to 87.3%, while the operating rate for utilities increased 0.2PP to 68.9%. The rate for mining was 1.0PP 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 (+1.6% YoY) to 131.7% of 2017 output. Manufacturing also edged up by 0.1% (+1.2% YoY) to 129.8%. Wood products: +0.1% (+1.0% YoY) to 127.0%; paper: -0.1% (-0.7% YoY) to 109.6%.

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.