Industrial Production and Capacity Utilization for May 1999 - Statistical Data Included

Federal Reserve Bulletin, July, 1999

Released for publication June 16

Industrial production rose 0.2 percent in May after gains of 0.4 percent in April and 0.7 percent in March. Manufacturing output advanced 0.4 percent in May, about matching the pace of the previous three months. Production at utilities fell sharply, and mining activity was little changed. At 134.1 percent of its 1992 average, industrial production in May was 1.7 percent higher than in May 1998; capacity utilization for total industry--at 80.5 percent--was off more than 2 percentage points from a year earlier.

MARKET GROUPS

The production of consumer goods, which had accelerated in March and April, edged up. The growth in the output of durable consumer goods decreased to a still-strong 0.8 percent rate. The deceleration primarily reflected a large drop in the production of appliances after a strong advance in April; other major categories posted output gains. In particular, the production of automotive products increased sharply for a second consecutive month. The production of nondurable consumer goods edged down; a small increase in the production of non-energy goods was more than offset by a significant drop in the production of energy goods, mainly utility output for residential use. Among non-energy nondurable consumer goods, growth in the production of consumer chemicals, food, tobacco, and paper products was partially offset by a drop in the production of clothing.

The output of business equipment inched up after an upward-revised advance of 0.9 percent in April. A substantial further rise in the production of information processing equipment and in the assembly of business vehicles was counterbalanced by lackluster activity in farm machinery and equipment, another cutback in the production of civilian aircraft, and a decline in the output of industrial equipment.

The production of construction supplies receded 0.2 percent but, on balance, has remained little changed from its high level earlier in the year: Over the past twelve months, output in this sector has increased 4.4 percent. The index for business supplies declined 0.3 percent after having increased substantially in March and April. The output of materials increased 0.5 percent. Among producers of durable goods materials, the output of semiconductors and computer parts continued to gain appreciably. The production of nondurable goods materials remained sluggish and was about 1 percent below the level of May 1998; the production of energy materials dropped.

INDUSTRY GROUPS

Production in manufacturing increased 0.4 percent. The factory operating rate inched up, to 79.7 percent, but was down from its May 1998 level of 81.6 percent. Durable goods production rose 0.6 percent-about the same pace as in the previous two months. In particular, the output of electrical machinery grew noticeably--albeit at a slower rate than in April--boosted by robust increases in the output of communications equipment and semiconductors. The production of motor vehicles and parts and of computers increased more than 2 percent. Excluding computers, the production of industrial machinery declined more than 1 percent. The production of fabricated metals also retreated in May, but the output of iron and steel rebounded. With gains in production matching gains in productive capacity, the rate of capacity utilization in durable manufacturing remained unchanged at 79.5 percent, a level identical to its 1967-98 average.

The output of nondurable manufactured goods advanced 0.2 percent; production has been advancing slowly since last autumn and has increased about 1 percent over the past four months. Furthermore, most major industries posted gains in May. The only major industries registering declines were textile and apparel products, both of which had posted substantial increases in April. The operating rate in nondurable manufacturing edged up 0.1 percentage point, to 80.4 percent: Utilization for these industries was more than 2 percentage points below its level of May 1998 and was 3 percentage points below its long-term average.

Mining production inched up. Reductions in the output of coal and stone and earth minerals partly offset advances in drilling for oil and gas wells and in metal mining. The rate of capacity utilization in mining stayed at 80.7 percent in May, down from 87.9 percent twelve months earlier. Most of the drop in capacity utilization over the past year reflects severe weakness in oil and gas drilling activity that has persisted throughout the period.

Output at utilities, which had rebounded 4.9 percent in March and posted a small increase in April, fell 2.2 percent, with declines in both gas and electric utilities. The operating rate at electric utilities remained above its historic average, while utilization at gas utilities was about 7 percentage points below the 1967-98 average.

NOTICE

This release contains revised estimates of capacity and capacity utilization for selected industries beginning with the data for January 1999. With the revision, the estimated growth of aggregate capacity between the fourth quarter of 1998 and the fourth quarter of 1999 increased 0.2 percentage point, to about 3 3/4 percent. In addition, beginning with the data for February 1999, the industrial production indexes were revised to reflect the semiannual revision to seasonal factors for motor vehicle assemblies and for series that use production-worker hours as their monthly indicator.