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Industrial production and capacity utilization for May 1995.

Released for publication June 15

Industrial production declined 0.2 percent in May after a revised decline of 0.5 percent in April. The May decrease reflects a drop of 3.9 percent in the Industrial production indexes production of motor vehicles and parts; excluding motor vehicles and parts, industrial production was unchanged from its level in April. Manufacturing output fell 0.3 percent and mine production declined 1.0 percent, but output at utilities advanced 0.6 percent. At 120.9 percent of its 1987 average, industrial production in May was 3.1 percent higher than it was in May 1994. Capacity utilization declined 0.5 percentage point in May after having declined 0.7 percentage point in April. At 83.7 percent, the rate of capacity utilization in May was 1.8 percentage points below the most recent high, attained this past December and January.

When analyzed by market group, the data show that the overall output of consumer goods decreased 0.2 percent in May, continuing the retreat that began in March. The output of the durable goods component dropped 2.1 percent, largely because of further sizable cutbacks in the production of consumer autos and trucks. Among other consumer durables, the production of appliances and television sets increased, and the output of furniture and carpeting fell. The output of the nondurable component of consumer goods increased 0.3 percent; growth in residential sales by electric utilities and increases in the production of drugs and medicines and consumer paper products more than offset further decreases in the output of gasoline and distillate fuel oil.

The production of business equipment edged up 0.1 percent in May after having decreased 0.2 percent in April. As in April, the output of transit equipment declined 2.5 percent in May, led by another large reduction in the production of business autos; the output of light trucks and commercial aircraft was also down significantly. The production of industrial equipment turned up 0.3 percent after two consecutive monthly declines, and the output of information processing equipment, led by a 2.0 percent increase in computers and office equipment, advanced 0.9 percent. The output of defense and space equipment fell 1.1 percent.

The overall output of intermediate products decreased 0.3 percent, as the production of construction supplies fell 0.6 percent and the output of business supplies slipped 0.1 percent.

The production index for materials decreased 0.3 percent, with declines in the output of durable and nondurable goods materials and energy materials. Reductions in the production of original equipment parts for motor vehicles and in the output of miscellaneous plastics and basic metals materials account for much of the decrease in durable goods materials. Textiles, containers, and chemicals all contributed to the fall in nondurable goods materials, while the decline in energy materials was attributable to a decrease in coal production.

When analyzed by industry group, the data show that factory output decreased 0.3 percent in May after a revised decline of 0.6 percent in April. In May, the output of durables manufacturers dropped 0.4 percent, while that of nondurables manufacturers slipped 0.1 percent. Among durables manufacturers, output fell significantly in four major industry groups: stone, clay, and glass products; primary metals; transportation equipment; and miscellaneous manufactures. Among other manufacturers of durables, the production of lumber and products and of furniture and fixtures rebounded somewhat in May, while that of instruments and industrial machinery and computer equipment continued to advance. Within nondurables manufacturing, increases in the production of tobacco and paper and products partly offset declines in textiles, petroleum products, rubber and plastics, and leather.

Reflecting the continuing decline in output, the factory operating rate declined further in May, to 83.0 percent of capacity, a level that is 2.2 percentage points below the most recent peak, reached in December 1994 and January 1995. The utilization rate in the primary-processing industries retreated 0.5 percentage point, to 87.9 percent; the most recent peak, in December 1994, was 90.8 percent. The utilization rate for advanced-processing industries also fell back 0.5 percentage point; at 81.0 percent, the May rate was 2.2 percentage points below its January 1995 peak.

The operating rate at utilities rose 0.4 percentage point, to 88.0 percent. The operating rate at mines decreased 0.9 percentage point, to 88.7 percent, largely because of a 7.0 percent decline in production at coal mines.
COPYRIGHT 1995 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 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Federal Reserve Bulletin
Date:Jul 1, 1995
Words:751
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