August 2023 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) increased 0.4% in August (+0.1% expected), and manufacturing output inched up 0.1%. The August reading for manufacturing was held back by a drop of 5% in the output of motor vehicles and parts; factory output elsewhere rose 0.6%. The index for mining moved up 1.4%, and the index for utilities climbed 0.9%. At 103.5% of its 2017 average, total industrial production in August was 0.2% above its year-earlier level. 

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Market Groups

In August, the drop in the output of motor vehicles and parts contributed to declines in the indexes for consumer durables and transit equipment. Most of the other major market groups posted increases in August. The index for consumer nondurables moved up 0.4%, and the index for materials advanced 0.7%. Within materials, energy materials rose 1.5%, while non-energy materials edged up 0.1%. The production of defense and space equipment jumped 3.5% in August and was up over 10% from its year-earlier level.

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Industry Groups

Manufacturing output rose 0.1% in August for its second consecutive monthly gain but was 0.6% below its year-earlier level (NAICS manufacturing: +0.1% MoM; -0.7% YoY). The index for durable manufacturing edged up 0.1% in August, and the index for nondurable manufacturing increased 0.2%. Other manufacturing (publishing and logging) moved down 0.2%.

Within durable manufacturing, gains of more than 1% were recorded by primary metals (1.6%); machinery (2.0%); aerospace and miscellaneous transportation equipment (3.3%); furniture and related products (1.3%); and miscellaneous (1.5%). Apart from the large drop in the index for motor vehicles and parts, small declines—all less than 1%—were registered by wood products (-0.4%); nonmetallic mineral products; fabricated metal products; and electrical equipment, appliances, and components. Despite the August drop in the output of motor vehicles and parts, the index was 5.9% above its year-earlier level. Within nondurable manufacturing, gains of 1% or more in August in the indexes for printing and support and for chemicals were partially offset by declines elsewhere (e.g., paper products: -0.3%).

In August, mining output rose 1.4% and was 3.9% above its year-earlier level. The August gain in mining resulted primarily from an increase of over 3% in the index for oil and gas extraction. The output of utilities rose 0.9%.

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Capacity utilization (CU) moved up to 79.7% in August, in line with its long-run (1972–2022) average.

Manufacturing CU remained at 77.9% in August, a rate that is 0.3 percentage point (PP) below its long-run (1972–2022) average (wood products: -0.4%; paper: -0.2%). The operating rate for mining jumped 1.4PP to 94.3%, 7.9PP above its long-run average. The operating rate for utilities rose 0.4PP to 73.0%, well below its long-run average.

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Capacity at the all-industries level increased by 0.1% MoM (+1.6% YoY) to 129.9% of 2017 output. Manufacturing also edged up by 0.1% (+1.4% YoY) to 128.8%. Wood products: less than +0.1% (+0.9% YoY) to 120.1%; paper products: -0.1% (-0.9% YoY) to 105.6%.

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.