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Industrial production and capacity utilization for March 1966.

Industrial production declined 0.5 percent in March after a revised gain of 1.3 percent in February. A strike-related drop in motor vehicle assemblies and parts production more than accounted for the decrease in output. Excluding the production of motor vehicles and parts, which dropped about 15 percent, industrial production rose 0.3 percent. Despite the effects of the strike, overall industrial production grew at an annual rate of 2.7 percent in the first quarter, up from 0.6 percent in the preceding quarter. The quarterly pickup largely reflects the bounceback in the production of aircraft and parts, which was sharply curtailed during the fourth quarter by a strike at a major producer. At 123.5 percent of its 1987 average, industrial production in March was 1.3 percent higher than it was in March 1995; excluding the output of motor vehicles and parts, the gain was 2.5 percent. Capacity utilization dropped 0.7 percentage point, to 82.5 percent.

When analyzed by market group, the data show that the output of consumer goods declined 0.9 percent. The production of automotive products fell 11 percent, and the production of other durable consumer goods eased fractionally after a partial rebound in February. The output of consumer nondurable goods, such as foods and utility output for residential use, gained 0.4 percent.

The production of business equipment declined 1.1 percent. The drop in assemblies of business vehicles caused the output of transit equipment to plunge 11.6 percent. The output of industrial equipment dipped 0.7 percent after a sizable gain of 1.6 percent in February. Led by another strong increase in the production of computer and office equipment, the output of information processing equipment advanced further. The output of business equipment rose at an annual rate of 14.7 percent in the first quarter after having barely increased in the fourth quarter; the swing largely reflects the fourth-quarter strike and the first-quarter return to work at a major aircraft producer.

The output of construction supplies, which rose 0.4 percent in March, was up at an annual rate of 2 percent in the first quarter, down from 6 percent in the fourth-quarter of 1995. The production of materials declined 0.4 percent in March, with the weakness concentrated in the durable goods materials used to make motor vehicles. The production of basic metals and parts for equipment, which includes parts for aircraft and components for high-technology equipment, rose. The output of nondurable goods materials, such as paper and textiles, advanced 0.5 percent. The production of energy materials, led by a gain in coal mining, increased 1.0 percent.

When analyzed by industry group, the data show that manufacturing output declined 0.8 percent; excluding motor vehicles and parts, production rose 0.2 percent. Although production in durable manufacturing motor vehicle and parts industry, production rose for steel, computers, other transportation equipment, lumber and products, and instruments. The output of nondurables was little changed, as gains and losses were fairly evenly spread among industries. The production in mining increased 2 percent, and output at utilities rose 0.7 percent.

The factory operating rate, which had rebounded 1 percentage point in February, fell 0.9 percentage point, to 81.4 percent. The utilization rate for motor vehicles and parts - included in the advanced-processing grouping - dropped from 78.2 percent to 66.4 percent and accounted for most of the overall decline in utilization in manufacturing. Among other advanced-processing industries, the changes in utilization were mixed. The utilization rate for primary-processing industries edged down 0.1 percentage point. Rates remain elevated for primary metals, machinery, and petroleum refining. In mining, the utilization rate rose 1.7 percentage points; gains were sizable in coal mining and oil and gas well drilling. The operating rate for utilities reversed half of February's decline.

[TABULAR DATA OMITTED]
COPYRIGHT 1996 Board of Governors of the Federal Reserve System
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Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Federal Reserve Bulletin
Date:May 1, 1996
Words:646
Previous Article:U.S. international transactions in 1995.
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