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Industrial production and capacity utilization.

Released for publication on October 17

The index of industrial production edged up 0.1 percent in September; after revision, the index was unchanged in August. The output of motor vehicles and parts rose 8 percent in September, more than reversing the decline in August. However, output at utilities fell sharply from the high levels evident since May. Output in other categories of production changed little, on balance. At 108.1 percent of its 1987 annual average, industrial production in September was 2.2 percent below its year-ago level. Despite little change in September and August, total output for the third quarter as a whole advanced

[TABULAR DATA OMITTED]

6 percent at an annual rate. Total industrial capacity utilization slipped 0.1 percentage point in September, to 79.7 percent.

Analyzing the production data by market group, output of consumer goods excluding autos and trucks was unchanged in September. A drop in electricity generation for residential use offset gains in production of appliances and paper products; most other consumer sectors posted small changes. Production of business equipment other than motor vehicles was flat in September and has not shown much improvement since it reached its cyclical low in March. Output of construction supplies, which declined a bit in July, rose about 0.5 percent in each of the past two months; despite the overall recovery evident since the spring, production in September remained well below its year-ago level. Output of materials, which had grown rapidly over the spring and early summer months, has changed little recently. Among durable materials, production of parts and materials used by the motor vehicle industry has been flat since July; the output of basic metals was unchanged last month. In August and September, production of nondurable materials, such as textiles, paper, and chemicals, was somewhat below the recent high level posted in July. Production of energy materials plunged in September because electricity generation, which was maintained at high levels over most of the spring and summer, returned to a more normal level.

Analyzing the production data by industry group, manufacturing output increased 0.5 percent in September, with the rise in motor vehicles accounting for most of the gain. Factory utilization edged up 0.2 percentage point, to 78.7 percent, in September, retracing the decline in August. Operating rates for primary- and advanced-processing industries rose slightly, but still remain well below their 1967-90 averages. Operating rates in most primary-processing industries changed little except in petroleum products, which advanced noticeably. In the advanced-processing category, the utilization rate for motor vehicles and parts rose sharply, but factory operating rates for foods, printing, and machinery declined.

The operating rate at utilities fell very sharply in response to the step-down in demand for electricity. The utilization rate in mining was down for a second month but remained a bit above its historical average.
COPYRIGHT 1991 Board of Governors of the Federal Reserve System
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Federal Reserve Bulletin
Date:Dec 1, 1991
Words:475
Previous Article:An update on the farm economy.
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