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Industrial Production and Capacity Utilization for September 1999.

Released for publication October 15

Industrial production, which had risen 1 percent over July and August, declined 0.3 percent in September. Hurricane Floyd held down the production of electricity, motor vehicles, and some other goods; excluding the effects of the hurricane, industrial production would have posted a small increase. At 135.0 percent of its 1992 average, industrial production in September was 2.4 percent higher than in September 1998. For the third quarter as a whole, the total index increased at an annual rate of 3.7 percent, about the same pace as in the second quarter. The rate of capacity utilization for total industry declined 0.4 percentage point, to 80.3 percent, in September but was little changed from the rates that had prevailed in the first half of the year.


The output of consumer goods fell back 0.6 percent, reversing most of the August gain. The output of durable consumer goods decreased 2.3 percent. The production of automotive products fell as a result of a 9 percent drop in light truck assemblies, which have fluctuated around a high level since June. The production of other consumer durables eased for a second month, with the output of household appliances and room air conditioners falling sharply from an elevated level. The production of nondurable consumer goods flattened, after having increased 0.3 percent in August. The output of the non-energy components of consumer nondurables advanced 0.2 percent. However, the increase was offset by another decline in the production of energy products, which eased for a second month as the residential sales of electricity and gas fell 2.4 percent.

The production of business equipment, which had increased about 1.7 percent over July and August, fell 0.6 percent. The decline was led by a drop of more than 3 percent in the output of transit equipment, which has declined 9.5 percent over the past twelve months because of substantial cutbacks in the production of commercial aircraft, ships, and related equipment. In September, the assembly of business trucks also slowed, and the output of industrial equipment eased. In contrast, the production of information processing equipment and other equipment advanced, with another strong gain in computing equipment. The production of defense and space equipment fell again; it has declined about 4 percent since September 1998.

The production of construction supplies decreased 0.2 percent for a second month but remained near the high level reached early in the year. The output of materials remained nearly flat for a second month. The output of durable goods materials, which had edged downward in August, increased 0.4 percent, supported by further strength in the production of semiconductors and computer parts. The output of nondurable goods materials advanced 0.3 percent, a rate in line with the modest gains of the preceding two months, but the production of energy materials slumped 1.3 percent, primarily because of the decline in the generation of electricity and secondarily because of declines in the production of crude oil and coal.


Manufacturing output edged down 0.2 percent in September. Excluding the declines in motor vehicles, aircraft, and related parts, production in the rest of the manufacturing sector was essentially flat. The output of durables fell 0.5 percent, not only because of the 2 percent drop in the production of transportation equipment but also because of widespread easing among durables industries. Exceptions were the machinery and equipment industries, where the continued gains in the high-tech sector boosted output. The production in nondurable manufacturing advanced slowly for a second month, thereby mostly erasing the declines in June and July; within nondurable goods industries, the September gains were widespread, except for tobacco, apparel, and leather products, which experienced further substantial weakness.

The factory operating rate declined to 79.3 percent, with the easing concentrated in durable goods industries. With the drop in truck production, capacity utilization for autos and light trucks fell 5.0 percentage points, to 89.5 percent. The rate for aerospace and miscellaneous transportation equipment dropped 3.1 percentage points during August and September, to 73.2 percent, a rate 9.4 percentage points below that of September 1998.

The operating rate at electric utilities fell for a second month, to 93.9 percent--still a relatively high level. The operating rate for mining remained at 82.1 percent. Another month of recovery in oil and gas well drilling as well as an increase in metal mining about offset declines in the extraction of crude oil and coal.


In November the Federal Reserve will publish revisions to its measures of industrial production (IP), capacity, capacity utilization, and industrial use of electric power. The revisions will begin with 1992 and will incorporate updated source data for more recent years.

This regular updating of source data for IP will include some annual data from the Bureau of the Census's 1997 Census of Manufactures and from selected editions of its 1998 Current Industrial Reports. Annual data from the U. S. Geological Survey on metallic and nonmetallic minerals (except fuels) for 1997 and 1998 will also be introduced. The updating will also include revisions to the monthly indicator for each industry (either physical product data, production-worker hours, or electric power usage) and revised seasonal factors. In addition, the revision will introduce improved measures of production for selected series.

Capacity and capacity utilization will be revised to incorporate preliminary data from the 1998 Survey of Plant Capacity of the Bureau of the Census. The statistics on the industrial use of electric power will incorporate additional information received from utilities for the past few years and may include some data from the 1997 Census of Manufactures.

Once the revision is published, it will also be made available on the IP area of the Board's web site ( and on diskettes from Publications Services (telephone 202-452-3245). The revised data will also be available through the STAT-USA web site of the Department of Commerce ( Further information on these revisions is available from the Board's Industrial Output Section (telephone 202-452-3197).
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Publication:Federal Reserve Bulletin
Geographic Code:1USA
Date:Nov 1, 1999
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