February 2019 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) edged up 0.1% in February (+0.4% expected) after decreasing 0.4% in January (originally -0.6%). Manufacturing production fell 0.4% in February for its second consecutive monthly decline. The index for utilities rose 3.7%, while the index for mining moved up 0.3%. At 109.7% of its 2012 average, total industrial production was 3.5% higher in February than it was a year earlier. 

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Industry Groups

Manufacturing output decreased 0.4% in February after falling 0.5% in January. In February, the index stood 1.0% above its year-earlier level (NAICS manufacturing: -0.4% MoM; +1.2%YoY). The output of durables edged down. Losses of 1½% or more were registered by nonmetallic mineral products, by machinery, and by furniture and related products, while gains of more than 1% were registered by computer and electronics products, by aerospace and miscellaneous transportation equipment, and by miscellaneous manufacturing (wood products: +0.8%). Nondurable goods production fell 0.7%. Most major nondurable goods industries posted decreases; the only increases were recorded by paper products (+0.7%) and by food, beverage, and tobacco products. Production of other manufacturing (publishing and logging) increased 0.5% but remained well below its year-earlier level.

The output of utilities rose 3.7% in February; the output of electric utilities rebounded from decreases in the previous two months. Mining output moved up 0.3% for its 13th consecutive monthly increase, and the index was 12.5% above its level of a year earlier. 

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Capacity utilization (CU) for the industrial sector edged down less than 0.1 percentage point (PP) in February to 78.2%, a rate that is 1.6PP below its long-run (1972–2018) average.

Manufacturing CU declined 0.4PP in February to 75.4%, almost 3PP below its long-run average, with losses for durables and for nondurables (NAICS manufacturing: -0.5%, to 76.0%; wood products: +0.6%, to 75.4%; paper products: +0.7%, to 87.0%) but a gain for other manufacturing (publishing and logging). The utilization rate for mining decreased to 94.6% but remained well above its long-run average of 87.1%. The rate for utilities jumped to 78.6%, but it was still nearly 7PP below its long-run average. 

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Capacity at the all-industries level nudged up 0.2% (+2.2 % YoY) to 140.2% of 2012 output. Manufacturing (NAICS basis) rose fractionally (+0.1% MoM; +1.5% YoY) to 139.4%. Wood products: +0.2% (+3.4% YoY) to 164.6%; paper products: -0.1% (-1.0 % YoY) to 110.2%.

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.