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Industrial production and capacity utilization.

The index of industrial production decreased 0.2 percent in December, after having declined 0.2 percent in November and 0.1 percent in October. In December, the output of utilities fell sharply because of warmer-than-usual weather, while the production of motor vehicles and parts dropped about 1 percent further. Elsewhere, production rose a bit, led by gains in nonenergy materials and construction supplies. At 107.8 percent of its 1987 annual average, total industrial production in December was 0.6 percent above its year-ago level. For the fourth quarter as a whole, the level of total output was little changed from that of the third quarter. Total industrial capacity utilization decreased 0.3 percentage point in December to 79.0 percent.

When analyzed by market group, the data show that the production of consumer goods fell 0.4 percent, reflecting sharp declines in utility output for residential use and motor vehicles. Among other consumer goods, the production of goods for the home, such as appliances, fell last month, but the output of many nondurables posted small increases. Despite the ongoing strike in the construction and mining machinery industry that began in November, the production of business equipment excluding autos and trucks was about unchanged again in December, particularly because of increases in computers and other information-processing equipment. Among materials, the production of nondurables, which fell more than I percent in November, rebounded last month, mainly because of swings in the output of paper; the production of both chemicals and textiles also moved up in December after small declines in the previous month. The output of durable materials rose slightly as most major industries posted small increases. The gains in the production of durable and nondurable materials were nearly offset by the sharp weather-related drop in electricity generation.

When analyzed by industry group, the data show that manufacturing production edged up in December, leaving capacity utilization at factories nearly unchanged at 78.1 percent. Operating rates for primary-processing industries rose 0.2 percentage point, but those for advanced-processing industries fell 0.2 percentage point. The utilization rate for advanced-processing industries has fallen back in the past few months to a level only slightly above its March low, mainly because of reduced output of motor vehicles and nonelectrical machinery. The operating rate for primaryprocessing industries, which increased a bit in August and September, has slipped back slightly since then. Its dip in November and partial rebound in December mainly resulted from movements in paper output. Elsewhere in primary processing, the utilization rate for steel edged down in December but remained well above its summer level.

Output at utilities fell sharply as warmer-thanusual weather reduced the demand for electricity and gas. Mining output declined slightly as oil and gas extraction activity slowed further.
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Publication:Federal Reserve Bulletin
Date:Mar 1, 1992
Words:461
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