February 2024 Industrial Production, Capacity Utilization and Capacity

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Total industrial production (IP) edged up 0.1% in February (0.0% expected) after declining 0.5% in January (originally -0.1%). In February, the output of manufacturing rose 0.8% and the index for mining climbed 2.2%. Both gains partly reflected recoveries from weather-related declines in January; also, January’s data was revised from -0.5% MoM to -1.1%. The index for utilities fell 7.5% in February because of warmer-than-typical temperatures. At 102.3% of its 2017 average, total IP in February was 0.2% below its year-earlier level. 

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Market Groups

The output of most major market groups moved up in February. An exception is the index for consumer goods, which declined 1.4%, driven almost entirely by a utilities-related decrease of 8.6% in the index for consumer energy. Elsewhere in consumer goods, the indexes for non-energy nondurables and durables rose 0.6 and 0.9%, respectively. Similarly, within materials, all market groups posted gains except energy materials, the output of which fell 0.2%. All other market groups also recorded increases, led by construction supplies and business equipment, the output of which increased 1.9 and 1.7%, respectively.

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Industry Groups

Manufacturing output stepped up 0.8% in February after declining 1.1% in January. In February, durable manufacturing posted a gain of 1%, and the index for nondurable output increased 0.7%. The output of other manufacturing (publishing and logging) inched down 0.1%. Among durables, notable increases were recorded in wood products (2.4%), miscellaneous manufacturing (2.3%), and motor vehicles and parts (1.8%). Nondurables also experienced widespread growth, with the largest increases in the output of chemicals (1.6%), printing and support (1.5%), and paper (1.1%).

Mining output climbed 2.2% in February after falling 2.9% in January. The output of utilities, however, dropped 7.5% in February as the indexes for electric and natural gas utilities decreased 6.5 and 13%, respectively.

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Capacity utilization (CU) for the industrial sector remained at 78.3% in February, a rate that is 1.3 percentage points (PP) below its long-run (1972–2023) average.

Manufacturing CU increased 0.6PP to 77% in February, a rate that is 1.2PP below its long-run average (wood products: +2.3%; paper: +1.1%). The operating rate for mining moved up 2.1PP to 93.8%, a rate that is 7.3PP above its long-run average. The operating rate for utilities slid 5.7PP to 67.8%, well below its long-run average of 84.4%.

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Capacity at the all-industries level edged up by 0.1% MoM (+1.4% YoY) to 130.8% of 2017 output. Manufacturing also increased by 0.1% (+1.5% YoY) to 129.8%. Wood products: +0.1% (+0.4% YoY) to 120.3%; paper products: unchanged (-1.0% YoY) at 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.