September 2023 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) increased 0.3% in September (0.0% expected) and advanced at an annual rate of 2.5% in 3Q. Manufacturing output rose 0.4% in September, the index for mining moved up 0.4%, and the index for utilities decreased 0.3%. At 103.6% of its 2017 average, total industrial production in September was 0.1% above its year-earlier level. 

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Market Groups

Most major market groups recorded gains in September. The index for consumer durables rose 1.2% amid widespread increases in its components. On the other hand, the index for consumer nondurable goods was unchanged, as a gain in chemical products was offset by a decline in energy nondurable goods. The production of business equipment fell 0.7%, while the index for defense and space equipment recorded its fifth consecutive monthly gain of at least 1%. Within materials, the index for non-energy durables rose 0.8%, and the index for non-energy nondurables increased 0.5%.

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Industry Groups

Manufacturing output rose 0.4% in September but was 0.8% below its year-earlier level. In 3Q, factory output moved sideways, as a gain of 2.3% (annual rate) in the index for durable manufacturing was offset by a decline of 2.4% (annual rate) in the index for nondurable manufacturing.

In September, the index for motor vehicles and parts moved up only 0.3%, as motor vehicle assemblies were held down by the ongoing strike against three automakers. Elsewhere in manufacturing, gains of 1% or more were recorded by wood products (+2.4%), primary metals, and plastics and rubber products (paper products: +0.5%), and declines of 1% or more were recorded by apparel and leather as well as printing and support. Other manufacturing (publishing and logging) edged down 0.2% but posted a gain of 4.8% for 3Q as a whole.

Mining output moved up 0.4% in September for a fourth consecutive monthly gain. For 3Q, the output of mines advanced at an annual rate of 6.9%. The index for utilities dropped 0.3% in September but saw a 3Q gain of 15.2% (annual rate).

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Capacity utilization (CU) moved up 0.2 percentage point (PP) to 79.7% in September, a rate that is equal to its long-run (1972–2022) average.

Manufacturing CU edged up 0.1PP to 77.8% in September, a rate that is 0.4PP below its long-run (1972–2022) average (wood products: +2.4%; paper: +0.6%). The operating rate for mining increased 0.5PP to 95.1%, a rate that is 8.7PP above its long-run average. The operating rate for utilities decreased 0.4PP to 72.7%, 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 130.0% of 2017 output. Manufacturing also edged up by 0.1% (+1.4% YoY) to 128.9%. Wood products: less than +0.1% (+0.8% YoY) to 120.1%; paper products: -0.1% (-1.0% YoY) to 105.7%.

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.