Industrial production and capacity utilization for June 1997.

Industrial production increased 0.3 percent in June, about the same pace as in the previous three months. The production of motor vehicles rebounded sharply in June from the strike-reduced levels of April and May. Continued strength in commercial aircraft and the high-technology sector again contributed importantly to the growth of output. As more seasonal weather returned, the output at utilities increased 0.4 percent; the output at mines was unchanged. For the second quarter as a whole, industrial production grew 4.3 percent at an annual rate, about the same as in the previous two quarters. At 119.9 percent of its 1992 average, industrial production in June was 3.8 percent higher than it was in June 1996 -- more than half of this increase reflects gains in computers, semiconductors, and commercial aircraft and parts. The rate of industrial capacity utilization was unchanged, at 83.5 percent.

Market Groups

Paced by another sharp increase in the production of durable consumer goods, the overall output of consumer goods rose 0.3 percent; the production of nondurable consumer goods was unchanged. Among durables, the output of consumer motor vehicles rose 4.0 percent to near its pre-strike (March) level. The production of appliances and home computing equipment also posted strong increases. The production of nondurable consumer goods other than energy products was flat and little changed from its level in March; gains in clothing and in paper products were offset by declines in foods and tobacco and in consumer chemical products. The output of consumer energy products was also little changed, with a small gain in residential electricity sales largely offset by a small loss in fuels.

The output of business equipment rose 0.8 percent, and that of defense and space equipment also posted a strong gain. The growth in business equipment was led by the rebound in business vehicles and by further strong increases in the output of information processing equipment and of commercial aircraft. However, the production of industrial equipment and of other equipment, both of which had declined noticeably in May, slipped again in June; even so, the output indexes for both sectors remained above March levels.

The output of construction supplies fell 0.4 percent, reversing part of the May increase; as a result, the June index for this market group is now more than 1 percent below its peak in March, but it is still above its average level for the fourth quarter of last year. The production of materials edged up 0.1 percent, led by another gain in the output of durable goods materials. Among the components of durable materials, the output of equipment parts, particularly semiconductors, rose sharply, and the production of parts for consumer durables, mainly for motor vehicles, also increased. Energy materials fell 0.3 percent, with a large decrease in coal production more than offsetting increases in electricity generation and sales. The output of nondurable goods materials slipped 0.2 percent.

Industry Groups

Manufacturing output increased 0.3 percent after identical increases in April and May. Excluding motor vehicles and parts, the output in manufacturing rose 0.2 percent, or about half the rate recorded during the previous two months. As in the past few months, much of the strength in manufacturing reflects the increased output of durable goods; the production of nondurables remains little changed from the end of last year. Gains were widespread within the durable goods sector, with only the furniture and primary metals industries declining appreciably. Increases were especially strong in electrical machinery and transportation equipment. The production of nondurables was flat -- gains in the apparel, printing, and petroleum products industries were offset by declines in the rest of the sector, especially tobacco, paper, and leather and products.

Mining output was flat, with another big gain in oil and gas well drilling offset by a large drop in coal mining; utility output increased.

The factory operating rate edged down 0.1 percentage point, to 82.5 percent, the same level as in December 1996. The utilization rate for advanced-processing industries remained at 80.5 percent, which is slightly below its long-term average. The rate for primary-processing industries, which had risen 0.3 percentage point in May, fell 0.4 percentage point, to 87.0 percent, well below its recent high of 89.6 percent in December 1994; the operating rates for all primary-processing industries fell. The operating rate at mines decreased 0.1 percentage point, to 94.5 percent, while the rate at utilities increased 0.2 percentage point, to 87.1 percent.

Note: This release contains revised estimates of capacity for selected industries for March through December 1997. The revision increased the estimated growth of aggregate capacity 0.2 percentage point between December 1996 and December 1997.

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