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Industrial production and capacity utilization.

Industrial production fell 0.4 percent in January, following drops of 1.6 and 1.1 percent (revised) in November and December. Output of autos and trucks, which fell sharply throughout the fourth quarter of last year, tuRNed up in January. Excluding motor vehicles and parts, production decreased 0.6 percent, slightly less than during the previous three months. Total industrial capacity utilization fell 0.5 percentage point in January to 79.9 percent, nearly 3 percentage points below its level a year earlier. At 106.5 percent of its 1987 annual average, total industrial production in January was 0.9 percent below its level of a year ago.

In market groups, production of consumer goods other than motor vehicles decreased again in January; since October, output in this category has fallen about 1 1/4 percent, reflecting, in part, sizable cuts in clothing, energy products for consumer use, and goods for the home, such as appliances and furniture. Output of business equipment excluding motor vehicles fell 0.5 percent in January, owing mainly to another large drop in the production of information-processing equipment, particularly computers. Production of construction supplies declined further in January; it has fallen more than 7 percent since last summer. Among materials, output of durables has dropped over the past four months, with much of the weakness reflecting the effects of the cutbacks in motor vehicle production. In January, production of parts and materials for autos and trucks firmed, but output of basic metals, particularly steel, was curtailed again. Production of nondurable materials also has weakened steadily, on balance, since October. Output of textiles, which dropped sharply late last year, rose somewhat in January; however, production of chemicals declined last month. Output of energy materials was little changed in both December and January.

In industry groups, manufacturing production declined 0.4 percent in January, lowering the operating rate at factories to 78.8 percent. The operating rate for manufacturing is now about 2 1/2 percentage points below its 1967-90 average, and at its lowest rate since September 1986. The production declines in January, as well as during the fourth quarter, hit virtually all major industries, with most operating rates falling below their 1967-90 averages. Large declines in the last few months have come in motor vehicles and related industries, such as fabricated metal products and steel. Construction-related industries, such as lumber, furniture, and stone, clay, and glass products, also have been hard hit, as have petroleum refining, textiles, and apparel. Mining output has only fallen off slightly during the past few months, while utilities production has declined somewhat more, reflecting the relatively mild winter.

The capacity utilization and capacity data for 1990 have been revised. The capacity growth rate for total industry during 1990 was revised down slightly; the most significant adjustments occurred in the motor vehicles industry. (TABULAR DATA OMITTED)
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:Apr 1, 1991
Previous Article:Treasury and Federal Reserve foreign exchange operations.
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