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Industrial production and capacity utilization.

Industrial Production and Capacity Utilization Industrial production fell 0.8 percent in February after declines of 1.1 percent and 0.5 percent respectively in December and January. Assemblies of autos and trucks fell more than 5 percent, retracting their January rise. Excluding motor vehicles and parts, production decreased 0.7 percent in February--about the same as declines in the previous three months. Total industrial capacity utilization fell 0.8 percentage point in February to 79.1 percent, its lowest level since late 1986. At 105.7 percent of its 1987 annual average, industrial production in February was 2.6 percent below its level a year ago.

In market groups, in February, output of consumer goods excluding autos and trucks fell 0.5 percent, about the same rate of decline as in December and January. Production of appliances, carpeting, furniture, and electricity for residential use fell last month, more than offsetting a sharp jump in consumer fuel, particularly gasoline. Output of business equipment other than motor vehicles decreased 0.4 percent further in February, reflecting sizable declines in both industrial and farm equipment; production of information-processing equipment, which includes computers, posted gains in both January and February. Output of construction supplies fell 1.1 percent in February, continuing the sharp contraction that began in August.

For the third successive month, the rate of decline in the output of materials exceeded that of products, owing mainly to widespread cutbacks in production of durable materials, particularly parts used by the motor vehicle industry and basic metals. Production of nondurable materials was about unchanged in February, after having fallen in each of the three preceding months: last month, a rise in the output of paper materials about matched declines in textiles and chemicals. Production of energy materials was reduced again in February because electricity generation dropped sharply.

In industry groups, manufacturing output fell 0.8 percent in February, and the factory utilization rate fell 0.8 percentage point to 78.0 percent, its lowest rate since December 1983. Once again, declines occurred in most major industries, although they were more pronounced in durable manufacturing. Output in primary metals fell sharply for the third consecutive month; iron and steel output dropped about 7 1/2 percent in both January and February, lowering its utilization rate to less than 69 percent. The utilization rate for lumber and products also fell sharply because output fell 3.5 percent.

Utilization in manufacturing has been falling rapidly since September after having edged down throughout the summer. The principal contributors to this drop have been motor vehicles and related industries, although declines also have been recorded in almost all industries.

Output at mines increased 0.8 percent in February, mainly reflecting a gain of 4 percent in coal production. Production at utilities fell 3.3 percent as relatively mild winter weather continued.
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:May 1, 1991
Words:473
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