Industrial production fall in February
Industrial production fell 1.4 percent in February; the overall index has now declined for 4 consecutive months and for 10 of the past 12 months, according to a report released March 16 by the Federal Reserve.
At 99.7 percent of its 2002 average, output in February was 11.2 percent below its year-earlier level and was the lowest level since April 2002. Production in the manufacturing sector moved down 0.7 percent, with broad-based declines among its components.
An increase in the production of motor vehicles and parts after the extended plant shutdowns in January, however, added nearly 1/2 percentage point to the change in manufacturing production.
Outside of manufacturing, the output of mines moved down 0.4 percent, while a swing to above-average temperatures contributed to a 7.7 percent drop in the output of utilities. The capacity utilization rate for total industry fell to 70.9 percent, a rate 10 percentage points below its average from 1972 to 2008. This rate matches the historical low for this series, which was recorded in December 1982; the data for total industrial utilization begin in 1967.
The production of consumer goods decreased 0.7 percent in February. Consumer durable goods rose 1.6 percent, consumer non-energy nondurable goods edged down 0.1 percent, and consumer energy products declined 3.4 percent. Among consumer durables, the output of automotive products rose 8.5 percent but remained about 35 percent below its year-earlier level.
After dropping from an annual rate of 6.6 million units in December to a rate of 3.8 million units in January, motor vehicle assemblies increased in February to 4.7 million units. The index for home electronics moved down 1.9 percent; the index for appliances, furniture, and carpeting dropped 3.3 percent; and the index for miscellaneous goods fell 3.1 percent.
Among non-energy nondurable goods, the index for clothing decreased 1.5 percent, and the index for consumer chemical products declined 0.2 percent; the output of foods and tobacco was unchanged, while the output of paper products edged up 0.1 percent. Lower residential sales of electricity and natural gas accounted for the decline in the index for consumer energy goods, while fuels output increased because of higher gasoline production.
The output of business equipment decreased 1.3 percent in February after dropping 4.2 percent in January. In February, a rise of 3.2 percent in the production of transit equipment, primarily resulting from the gain in vehicle production, was more than offset by a decline of 1.0 percent in the index for information processing equipment and a contraction of 2.8 percent in the index for industrial and other equipment. Decreases were widespread among the components of the latter two categories.
After increasing 1.1 percent in January, the output of defense and space equipment advanced 0.8 percent further in February; the gains in the past two months have reversed much of the slide in this index during 2008.
In February, manufacturing output decreased 0.7 percent and was 13.1 percent below its year-earlier level. After falling to a historical low in January, the factory operating rate, which dates back to 1948, moved down an additional 0.5 percentage point in February, to 67.4 percent. The production index for durable goods declined 1.2 percent. The output of motor vehicles and parts expanded 10.2 percent, and the output of aerospace and miscellaneous transportation increased 0.4 percent.
However, all of the other major indexes in this category fell sharply. The production of nondurable goods decreased 0.4 percent. The output of petroleum and coal products rose 0.7 percent after having fallen in each of the previous three months; the production of food, beverage, and tobacco products edged up 0.1 percent in February. Sizable declines, however, were recorded in most other major nondurable goods industries.
The index for the other manufacturing category, which consists of publishing and logging, decreased 0.4 percent.
Mining output moved down 0.4 percent, and the utilization rate fell to 88.2 percent, a rate below its year-earlier level but still 0.6 percentage point above its 1972-2008 average. The output of electric and gas utilities fell 7.7 percent, and the operating rate dropped to 80.1 percent, a rate 6.7 percentage points below its 1972-2008 average.
Capacity utilization rates in February at industries grouped by stage of process were as follows: At the crude stage, utilization edged down 0.1 percentage point, to 83.5 percent, a rate 3.2 percentage points below its 1972-2008 average; at the primary and semifinished stages, utilization dropped 2.1 percentage points, to 68.3 percent, a rate 13.8 percentage points below its long-run average; and at the finished stage, utilization slipped 0.1 percentage point, to 69.1 percent, a rate 8.5 percentage points below its long-run average.
The Federal Reserve Board plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity utilization on March 27, 2009, at 2:00 p.m. EDT. The revised IP indexes will incorporate data from selected editions of the U.S. Census Bureau's 2007 Current Industrial Reports. Detailed data from the 2007 Economic Census, however, are not expected to be available. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2007 will also be incorporated. The update will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry as well as changes in the estimation methods for some series. Any changes to the methods for estimating the output of an industry will affect the index from 1972 to the present.
Once the revision is published, it will be available on the Board's website at www.federalreserve.gov/releases/G17. The revised data will also be available through the website of the Department of Commerce. Further information on the revision can be obtained from the Board's Industrial Output Section (telephone number 202-452-3197).
Note: The statistics in this release cover output, capacity, and capacity utilization in the U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.
