October 2023 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) declined 0.6% in October (-0.3% expected). Manufacturing output fell 0.7%. Much of this decline was due to a 10% drop in the output of motor vehicles and parts that was affected by strikes at several major manufacturers of motor vehicles—the index for manufacturing excluding motor vehicles and parts edged up 0.1%. The index for utilities decreased 1.6%, and the output of mines increased 0.4%. Total IP in October was 0.7% below its year-earlier level. 

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Market Groups

The output of major market groups was mixed in October, with the drop in motor vehicles and parts output exerting downward pressure on a number of categories. The index for consumer durables dropped 5.8%, led by a 10.3% decrease in the index for automotive products, while the production of consumer nondurable goods edged up 0.1%. The output of business equipment moved down 0.5% because of a drop in the transit component. The index for defense and space equipment rose 1.7% in October, its 10th consecutive monthly increase. The index for construction supplies edged up 0.2% and business supplies moved down 0.4%. Within materials, the largest decline was in durable materials, which includes automotive parts.

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Industry Groups

Manufacturing output dropped 0.7% in October and was 1.7% below its year-earlier level. The index for durable manufacturing slid 1.3% in October, and the index for nondurable manufacturing edged down 0.1%. Other manufacturing (publishing and logging) moved up 0.5%.

Within durable manufacturing, the output of motor vehicles and parts posted the largest decline (10%). Elsewhere, decreases were also seen in the indexes for primary metals (1.7%) as well as furniture and related products (1.4%), while the largest increases were recorded by computer and electronic products (1.9%) as well as electrical equipment, appliances, and components (1.5%); wood products (-0.4%). Within nondurable manufacturing, gains in the indexes for petroleum and coal products (2.2%) and paper (0.7%) were offset by declines in the indexes for plastics and rubber products (2.2%) and chemicals (0.6%).

Mining output moved up 0.4% in October and was 2.2% above its year-earlier level. The index for utilities, however, dropped 1.6% in October but was 2.9% above its year-earlier level.

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Capacity utilization (CU) moved down 0.6 percentage point to 78.9% in October, a rate that is 0.8PP below its long-run (1972–2022) average.

Manufacturing CU moved down 0.6PP to 77.2% in October, a rate that is 1PP below its long-run (1972–2022) average; wood products: -0.4%; paper: +0.8%. The operating rate for mining increased 0.5PP to 94.3%, a rate that is 7.9PP above its long-run average. The operating rate for utilities decreased 1.3PP to 71.4%, 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 130.2% of 2017 output. Manufacturing also edged up by 0.1% (+1.4% YoY) to 129.1%. Wood products: less than +0.1% (+0.7% YoY) to 120.1%; paper products: -0.1% (-1.0% YoY) to 105.5%.

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.