April 2023 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) rose 0.5% in April (0.0% expected) after moving sideways the previous two months. In April, manufacturing increased 1.0%, bolstered by a strong gain in the output of motor vehicles and parts; factory output excluding motor vehicles and parts moved up 0.4%. The index for mining rose 0.6%, while the index for utilities dropped 3.1%, as milder temperatures in April lowered demand for heating. At 103.0% of its 2017 average, total IP in April was 0.2% above its year-earlier level.

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Market Groups

Most major market groups recorded growth in April. The production of consumer durables was boosted by an 8.4% jump in the output of automotive products. Elsewhere, there were gains in business equipment (1.2%), defense and space equipment (1.1%), non-energy materials (0.8%), and construction supplies (0.4%). In contrast, nondurable consumer goods, business supplies, and energy materials all posted slight declines for the month.

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Industry Groups

Manufacturing output increased 1.0% in April; however, the growth rates for both February and March were revised down 0.3 percentage point (PP). All told, the index for manufacturing in April was 0.9% below its year-earlier level. Durable and nondurable manufacturing advanced 1.4% and 0.6% in April, respectively. Other manufacturing (publishing and logging) ticked down 0.1%. Industry groups within durable manufacturing posted somewhat mixed results, with the largest increase coming from motor vehicles and parts (9.3%) and the largest decrease coming from miscellaneous manufacturing (1.4%); wood products: +0.6%. Within nondurables, plastics and rubber products recorded the largest gain (1.2%), while apparel and leather recorded the largest loss (0.8%); paper products: -0.1%.

Mining output climbed 0.6% in April, with growth primarily coming from oil and gas extraction. The output of utilities declined 3.1%, as both electric and natural gas utilities production moved down.

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Capacity utilization (CU) edged up to 79.7% in April, a rate that is equal to its long-run (1972–2022) average.

Manufacturing CU moved up 0.7PP in April to 78.3%, a rate that is 0.1PP above its long-run (1972–2022) average (wood products: +0.6%; paper: 0.0%). The operating rate for mining rose 0.6PP to 91.8%, while the operating rate for utilities fell 2.6PP to 72.7%. The rate for mining was 5.4PP above its long-run average, while the rate for utilities remained well below its long-run average.

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Capacity at the all-industries level increased by 0.1% MoM (+1.5% YoY) to 129.3% of 2017 output. NAICS manufacturing also edged up by 0.1% (+1.3% YoY) to 128.1%. Wood products: +0.1% (+1.3% YoY) to 119.9%; paper: -0.1% (-0.6% YoY) to 106.2%.

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.