Industrial production and capacity utilization for July 1994.

Industrial production advanced 0.2 percent in July after an increase of 0.5 percent in June. The most significant gains occurred in business equipment and related parts as well as in durable consumer goods other than motor vehicles. A decline in the generation of electricity from its unusually high level in June, coupled with some strike activity, reduced the July gain in the total index about 0.2 percentage point. At 117.2 percent of its 1987 average, industrial production was 5.6 percent higher in July than it was a year earlier. The utilization of total industrial capacity, which has changed little since March, remained at 83.9 percent.

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When analyzed by market group, the data show that the output of consumer goods increased 0.4 percent in July, even though the production of automotive products declined 1.3 percent. The output of other consumer durables rose 2.9 percent, with gains in the output of appliances, television sets, and other household durables. Drops in the production of gasoline and residential electricity held the overall rise in consumer nondurables to 0.3 percent. Falling sales of residential electricity reversed only a fraction of the double-digit gain that had accounted for much of the overall increase in the production of consumer goods in June.

The output of business equipment, which advanced 0.5 percent, continues to be a source of strength, despite the flattening in motor vehicle production, the strike at a major producer of construction and mining equipment, and the continuing weakness in the aircraft industry. The gains in information processing and related equipment and in sectors of industrial equipment that were not affected by the strike were widespread and substantial. The output of defense and space equipment again declined significantly.

The production of construction supplies, which had risen sharply during the spring, edged down for a second moth. The output of business supplies, held down by a partial retreat in sales of commercial electricity, was little changed.

The increases in the output of materials, which had been very rapid through March, have been slowed by declines in the production of consumer durable parts used to make vehicles. Gains in equipment parts, however, especially semiconductors and computer parts, have been robust and have accounted for much of the 0.7 percent rise in the output of durable goods materials in July. The production of nondurable goods materials advanced 0.3 percent, after a 0.3 percent decline in June; gains in the output of paper and paperboard accounted for the rise. Declines in coal production and electricity generation caused the output of energy materials to fall about 1 percent, thereby reversing half its gain in June.

When analyzed by industry group, the data show that manufacturing production rose 0.4 percent in July, with much of the gain in durable goods such as machinery, instruments, and furniture and fixtures; the output of transportation equipment fell 1.6 percent. Among nondurables, the production of paper and products and food rose noticeably. With output growth approximately equaling estimated capacity growth in recent months, the rate of capacity utilization in manufacturing has remained at about 83 percent since March. Utilization rates in primary-processing industries, such as textiles, lumber, petroleum products, and iron and steel, remained well above their 1967-93 averages. In general, utilization rates in advanced-processing industries were closer to their long-run averages than the rates in primary-processing industries.

The output in mining fell 0.9 percent, with declines in coal and oil and gas well drilling. Production at utilities fell 1.2 percent.