December 2023 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) moved up 0.1% in December (-0.1% expected) and declined 3.1% at an annual rate in the fourth quarter. Manufacturing output edged up 0.1% in December after increasing 0.2% in November. The index for utilities declined 1.0% in December, while the index for mining rose 0.9%. At 102.5% of its 2017 average, total industrial production in December was 1% above its year-earlier level. 

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Market Groups

The major market groups posted mixed results in December. The production of consumer goods moved up 0.2%, largely from gains in durable consumer goods; the production of nondurable consumer goods was flat. The indexes of business equipment, construction supplies, and business supplies all registered slight declines in December. The output of defense and space equipment rose 0.5% in December and recorded a gain of 9.1% at an annual rate for the fourth quarter. Materials output edged up in December, as a slight decline in its non-energy component was more than offset by a gain of 0.5% in its energy component.

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Industry Groups

Manufacturing output ticked up 0.1% in December but declined 2.2% (annual rate) in the fourth quarter. Excluding motor vehicles and parts, factory output declined 0.1% in December and 0.3% (annual rate) in the fourth quarter. In December, the index for durable manufacturing fell 0.4%, while the index for nondurable manufacturing rose 0.6%. The index for other manufacturing (publishing and logging) declined 1.1%. Within durables, declines of more than 1% were recorded by wood products (-1.9%), by fabricated metal products, by machinery, and by electrical equipment, appliances, and components. Motor vehicles and parts as well as furniture and related products posted gains of more than 1%. Within nondurables, most industries registered gains with the exception of paper (-1.3%) and of printing and support.

In December, mining output increased 0.9%, and the output of utilities decreased 1.0%. For the fourth quarter, the output of mines fell 3.4% (annual rate) after increasing in the previous two quarters. The index for utilities dropped 8.2% (annual rate) in the fourth quarter after jumping over 15% in the previous quarter.

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Capacity utilization (CU) was unchanged in December at 78.6%, a rate that is 1.1 percentage points (PP) below its long-run (1972–2022) average.

Manufacturing CU remained unchanged at 77.1%, a rate that is 1.1PP below its long-run average (wood products: -1.9%; paper: -1.2%). The operating rate for mining moved up 0.9PP to 93.8%, a rate that is 7.4PP above its long-run average. The operating rate for utilities moved down 0.9PP to 70.0%, well below its long-run average.

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Capacity at the all-industries level increased by 0.1% MoM (+1.4% YoY) to 130.4% of 2017 output. Manufacturing also edged up by 0.1% (+1.4% YoY) to 129.4%. Wood products: less than +0.1% (+0.4% YoY) at 120.1%; paper products: -0.1% (-1.1% YoY) to 105.3%.

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.