Manufacturing Production Edges Upward

Manufacturing Engineering, Feb 2005

As part of the Federal Reserve Board's annual revision of industrial production, the Fed's recent report showed that at 78.2%, capacity utilization for total industry is 0.9% higher than previously reported, and manufacturing output rose a slight 0.3% in November with increases of 0.4% for durable equipment and 0.3% for nondurable items.

The revised report indicates the output of durable goods manufacturers followed a generally lower trajectory in recent years than the previous estimates suggested. Downward revisions were made to the indexes for the computer and electronic products industry, the miscellaneous manufacturing industry, the fabricated metal products industry, the machinery industry, and the wood products industry, which all contributed to the downward revision in 2003 and 2004.

Within manufacturing, the current estimates for durable and nondurable manufacturers in 2003 and 2004 are higher than stated previously. Over the same period, the utilization rates for other manufacturers are lower, particularly in 2004, than earlier estimates suggested.

"Both total industrial and manufacturing production increased a moderate 0.3% in November 2004," notes Daniel J Meckstroth, chief economist for the Manufacturers Alliance/MAPI (Washington, DC). "There was a somewhat slower pace of growth in investment as high material costs, energy, and employee medical-care cost squeezed profit margins. More importantly, November production was held down by lack of growth in consumer goods production. High interest rates and debt-constrained consumers have helped moderate the growth in purchases. Continued import growth also constrains domestic manufacturing."

For more information, see http://www.federalreserve.gov/release s/g17/current/default.htm.