March 2023 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) rose 0.4% in March (+0.3% expected) and was little changed in 1Q, increasing at an annual rate of 0.2%. In March, manufacturing and mining output each fell 0.5%. The index for utilities jumped 8.4%, as the return to more seasonal weather after a mild February boosted the demand for heating. At 103.0% of its 2017 average, total IP in March was 0.5% above its year-earlier level. 

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Market Groups

The major market groups posted mixed results in March. Nondurable consumer goods, business supplies, and energy materials all recorded notable gains as a result of the jump in the output of utilities. Defense and space equipment posted the only other gain, increasing 0.8%. Construction supplies recorded the largest drop (1.8%), followed by business equipment (1.0%), durable consumer goods (0.9%), and non-energy materials (0.5%).

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Industry Groups

Manufacturing output (SIC definition) decreased 0.5% in March and was 1.1% below its year-earlier level (NAICS manufacturing: -0.5% MoM; -0.9% YoY). For 1Q, SIC manufacturing edged up 0.3% at an annual rate (NAICS: +0.5%). The indexes for durable manufacturing and nondurable manufacturing moved down 0.9% and 0.1% in March, respectively, while the index for other manufacturing (publishing and logging) fell 0.7%. Most durables industries posted losses; wood products posted the largest drop (-2.9%), followed by nonmetallic mineral products, which fell 2.6%. Within nondurables, gains of at least 1% were registered by apparel and leather and by petroleum and coal products (paper products: +0.8%); chemicals posted the largest loss, at 0.9%.

Mining output slipped 0.5% in March, with declines in the indexes for oil and gas extraction, other mining, and support activities. The output of utilities jumped 8.4%, with advances for both electric and natural gas utilities.

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Capacity utilization (CU) moved up to 79.8% in March, a rate that is 0.1 percentage point (PP) above its long-run (1972–2022) average.

Manufacturing CU (SIC definition) moved down 0.5PP in March to 78.1%, a rate that is 0.1PP below its long-run average (NAICS manufacturing: -0.6% MoM, to 78.2%; wood products: -3.0%; paper: +0.9%). The operating rate for mining fell 0.5PP to 91.1%, while the operating rate for utilities jumped 5.6PP to 75.3%. The rate for mining was 4.7PP 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 (+1.4% YoY) to 129.1% of 2017 output. NAICS manufacturing also edged up by 0.1% (+1.2% YoY) to 128.0%. Wood products: +0.1% (+1.4% YoY) to 119.9%; paper: -0.1% (-0.6% YoY) to 106.3%.

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.