This Morning’s Key Economic Data - Industrial Production and Capacity Utilization for February 2010
March 15, 2010 – This Morning’s Key Economic Data – Industrial Production and Capacity Utilization for February – Both industrial production and capacity utilization numbers for February provided further evidence of stabilization in key segments of the economy.
However, production of consumer goods contracted, indicating still soft demand in the critical consumer segment of the economy which represents 70% of GDP. Calculated Risk notes “that capacity utilization at 72.7% is still far below normal - and far below the pre-recession levels of 80.5% in November 2007”, and that while “this is the highest level for industrial production since Dec 2008…production is still 10.1% below the pre-recession levels at the end of 2007.”
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
Industrial production edged up 0.1 percent in February following a gain of 0.9 percent in January. Production was likely held down somewhat by winter storms in the Northeast. Manufacturing decreased 0.2 percent in February, with mixed results among its major industries. The output of mines rose 2.0 percent, while the index for utilities rose 0.5 percent. At 101.0 percent of its 2002 average, industrial output in February was 1.7 percent above its year-earlier level. Capacity utilization for total industry moved up 0.2 percentage point to 72.7 percent, a rate 7.9 percentage points below its average from 1972 to 2009.
Market Groups
The production of consumer goods fell 0.4 percent in February. The index for consumer durables fell 2.3 percent, while the index for consumer nondurables edged up 0.1 percent. The decline in consumer durables was led by a drop of 4.4 percent in automotive products; other major components registered small declines. Despite the decrease in February, the output of consumer durables was up 9.2 percent from its year-earlier level as a result of an increase of 27.0 percent in automotive products; the indexes for the other major components of consumer durables were below their year-earlier levels. Among consumer nondurables in February, the output of non-energy goods fell 0.3 percent, with declines in all of the index's major components, while the output of energy goods increased 1.1 percent. The gain for consumer energy goods largely reflected a rebound in the production of refined petroleum products, which had decreased in the previous two months.
The output of business equipment rose 0.4 percent in February but remained 0.7 percent below its year-earlier level. Information processing equipment advanced 1.2 percent, about its average rate of increase over the previous three months. Industrial and other equipment moved up 0.3 percent. Transit equipment fell 0.9 percent, the fifth consecutive monthly decline for this index.
The production of defense and space equipment rose 1.3 percent in February and was 5.7 percent above its year-earlier level.
Within nonindustrial supplies, the output of construction supplies moved up 0.3 percent in February but was 4.5 percent below its year-earlier level. The production of business supplies edged down 0.1 percent after having risen for eight consecutive months.
The production of materials increased 0.3 percent in February. The index for non-energy materials edged down 0.1 percent; the output of durables was unchanged while nondurables fell 0.2 percent. Among the indexes for durable materials, consumer parts declined 0.8 percent, while equipment parts moved up 0.2 percent and other durable materials edged up 0.1 percent. Among major indexes for nondurable materials, textile materials advanced 1.5 percent, paper materials rose 0.4 percent, and chemical materials fell 0.7 percent. The index for energy materials rose 1.1 percent for its eighth consecutive monthly gain, with increases in coal mining and in support activities for oil and gas operations contributing significantly to the advance.
Industry Groups
In February, manufacturing output fell 0.2 percent after having risen 0.9 percent in January; the level of output in February was 1.5 percent above its year-earlier level. Capacity utilization for manufacturing edged down 0.1 percentage point in February to 69.0 percent, a rate 3.9 percentage points above its trough in June 2009 but 10.2 percentage points below its average for the period from 1972 to 2009.
The output of durable goods fell 0.3 percent in February, after having risen 1.7 percent in January, and was 2.1 percent above its year-earlier level. In February, motor vehicles and parts fell 4.4 percent and nonmetallic mineral products declined 1.6 percent; computer and electronic products rose 1.0 percent and electrical equipment, appliances, and components increased 0.9 percent. The indexes for primary metals, furniture and related products, and miscellaneous manufacturing fell slightly, while the indexes for wood products, fabricated metal products, machinery, and aerospace and miscellaneous transportation equipment rose slightly.
Nondurable manufacturing edged down 0.1 percent in February, after having risen 0.4 percent in January, and was 1.9 percent above its year-earlier level. The largest change in February was an increase of 2.2 percent for petroleum and coal products; results were mixed among other major components of nondurables.
In February, mining output gained 2.0 percent, and capacity utilization rose to 88.2 percent, a rate 0.7 percentage point above its average for the period from 1972 to 2009. The output of utilities rose 0.5 percent, as an increase in electric utilities more than offset a decline in natural gas utilities. Capacity utilization for utilities rose 0.3 percentage point to 83.1 percent, a rate 3.5 percentage points below its average for the period from 1972 to 2009.
Capacity utilization rates in February at industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.9 percentage point to 86.2 percent, a rate 0.3 percentage point below its average for the period from 1972 to 2009; at the primary and semifinished stages, utilization rose 0.2 percentage point to 69.6 percent, a rate 12.0 percentage points below its long-run average; while at the finished stage, utilization edged down 0.2 percentage point to 70.8 percent, a rate 6.7 percentage points below its long-run average.
