May 2023 Industrial Production, Capacity Utilization and Capacity

Click image for larger version

Total industrial production (IP) edged down 0.2% in May (+0.1% expected) following two consecutive months of increases. In May, the index for manufacturing ticked up 0.1%, while the indexes for mining and utilities fell 0.4 and 1.8%, respectively. At 103.0% of its 2017 average, total IP in May was 0.2% above its year-earlier level. 

Click image for larger version

Market Groups

Major market groups posted mixed results in May. Notable gains were recorded in the indexes for defense and space equipment (1.1%) and construction supplies (0.6%); most other major market groups recorded modest declines. Within business equipment, an increase of 2.1% in the transit component was more than offset by decreases of 3/4% in both the information processing and the industrial and other components.

Click image for larger version

Industry Groups

Manufacturing output edged up 0.1% in May after a gain of nearly 1% in April; the index in May is 0.3% below its year-earlier level. The indexes for durable manufacturing and other manufacturing (publishing and logging) increased 0.3% and 0.2%, respectively, while the output of nondurable manufacturing moved down 0.1%. Within durables, aerospace and miscellaneous transportation equipment posted the largest gain of 2.5%, while computer and electronic products posted the largest loss of 0.8% (wood products: -0.3%). The index for motor vehicles and parts moved up 0.2% in May after jumping nearly 10% in April. Within nondurables, a gain of 1.7% in May in the index for petroleum and coal products was more than offset by declines in most other industries (paper products: +0.1%).

Mining output slid 0.4% in May, driven primarily by decreases in coal mining and support activities (in particular, oil and gas well drilling). The output of utilities declined 1.8% for a second consecutive month, as electric utilities fell in May, while natural gas utilities remained unchanged.

Click image for larger version

Capacity utilization (CU) moved down to 79.6% in May, a rate that is 0.1 percentage point (PP) below its long-run (1972–2022) average.

Manufacturing CU remained at 78.4% in May, a rate that is 0.2PP above its long-run (1972–2022) average (wood products: -0.3%; paper: +0.2%). The operating rate for mining edged down 0.3PP to 92.2%, and the operating rate for utilities fell 1.5PP to 70.7%. The rate for mining was 5.8PP above its long-run average, while the rate for utilities remained well below its long-run average.

Click image for larger version

Capacity at the all-industries level increased by 0.1% MoM (+1.5% YoY) to 129.4% of 2017 output. Manufacturing also edged up by 0.1% (+1.3% YoY) to 128.3%. Wood products: less than +0.1% (+1.3% YoY) to 120.0%; paper: -0.1% (-0.7% YoY) to 106.1%.

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.