Industrial production and capacity utilization.

Released for publication on July 15

Industrial production rose 0.7 percent in June after upward revised gains of 0.7 percent in May and 0.5 percent in April. On a quarterly average basis, total output rose 1.7 percent at an annual rate in the April-June period after having fallen sharply in the two preceding quarters. In June, output of motor vehicles, goods for the home, construction supplies, and materials increased significantly. Total industrial capacity utilization increased 0.3 percentage point in June to 79.3 percent after an increase of 0.4 percentage point in May. At 106.9 percent of its 1987 annual average, total industrial production in June was 2.9 percent below its year-ago level.

In market groups, among consumer goods, production of motor vehicles posted another sizable increase; output of other durables, which include appliances, furniture, and carpeting, also rose noticeably for the fourth successive month. By contrast, output of nondurable consumer goods excluding residential utilities has risen only slightly in recent months. Production of business equipment other than motor vehicles, which declined over the fall and winter months, rose a bit in April and was unchanged in both May and June. Production of construction supplies advanced substantially in June after appreciable gains in April and May; even so the level of output was still more than 10 percent below its most recent peak, which occurred in early 1990. Among materials, production of parts and supplies for the motor vehicle industry rose further. In addition, output of steel, textiles, and paper increased sharply.

In industry groups, manufacturing output increased 0. 7 percent in June after sizable increases in May and April. While the turnaround in motor vehicles has contributed noticeably to these gains, the upturn in output is evident in many other industries, particularly those related to construction. Utilization in total manufacturing, since having reached a low in March of 77.2 percent, has risen to 78.1 percent in June. For primary processing industries, the operating rate has jumped nearly 2 percentage points since the March low; among advanced processing industries, the utilization rate has risen 0.6 percentage point since March. Elsewhere, output at mines increased 1. 5 percent, owing, in part, to a rebound in coal. Production at utilities, after a large weather-related increase in May, fell back only slightly last month. Among producers of nondurables, output of textiles, apparel, chemicals, and rubber and plastics strengthened over the second quarter. Although the gains in textiles last quarter were sizable, production in this industry in June was still more than 3 percent below its year-ago level.

The June increase in output of durable goods was again led by another rise in motor vehicles. In addition, large gains occurred in construction-related industries, steel, and fabricated metals. Output of nonelectrical machinery, which had fallen sharply between October and March, was little changed over the spring.

The three-month diffusion index of industrial production, which reached a low during the recent recession of 27.7 percent in January, increased to 50 percent in May, which indicates that the percentage of industries posting production advances during the three-month period ending in May was equal to the percentage in which output declined.