U.S. INDUSTRIAL PRODUCTION UP 1.6%

U.S. FRB - January 15, 2021 - Industrial production advanced 1.6 percent in December, with gains of 0.9 percent for manufacturing, 1.6 percent for mining, and 6.2 percent for utilities. The increase for utilities resulted from a rebound in demand for heating after unseasonably warm weather in November. For the fourth quarter as a whole, total industrial production rose at an annual rate of 8.4 percent. At 105.7 percent of its 2012 average, total industrial production in December was 3.6 percent lower than it was a year earlier and 3.3 percent below its pre-pandemic February reading. Capacity utilization for the industrial sector rose 1.1 percentage points in December to 74.5 percent, a rate that is 5.3 percentage points below its long-run (1972–2019) average.

Market Groups

Gains were widespread among the market groups in December. Both energy materials and consumer energy products recorded large increases because of the jump in utilities; a further rebound in the oil and natural gas sector also contributed to the strength in energy materials. Despite the gains in December, the indexes for most major market groups, other than durable consumer goods and defense and space equipment, remained below their year-earlier levels.

Industry Groups

Manufacturing output advanced 0.9 percent in December for its eighth consecutive monthly gain. For the fourth quarter, manufacturing production rose at an annual rate of 11.2 percent. The index for motor vehicles and parts declined 1.6 percent in December but was nevertheless 3.6 percent higher than its year-earlier level. Excluding the motor vehicle sector, factory output moved up 1.1 percent as most manufacturing industries posted gains. The production of durable goods other than motor vehicles and parts rose 1.5 percent, and nondurable goods production increased 0.9 percent. Within durables, primary metals posted its seventh consecutive monthly increase. Within nondurables, plastics and rubber products posted the largest gain (3.2 percent), while printing and support recorded the only decrease (1.4 percent). The output of other manufacturing (publishing and logging) decreased 0.6 percent.

The index for mining increased 1.6 percent in December, as continued gains in the oil and gas sector (both extraction and drilling) outweighed declines elsewhere; even so, the index was still 12.3 percent below its level of a year earlier. For the fourth quarter, mining output rose 3.7 percent at an annual rate.

Capacity utilization for manufacturing increased 0.7 percentage point in December to 73.4 percent, 13.3 percentage points higher than its trough in April but still 4.8 percentage points below its long-run average. The operating rates for mining and utilities increased to 80.5 percent and 74.5 percent, respectively, but both remained well below their long-run averages.

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue its annual revision to the indexes of industrial production (IP) and the related measures of capacity utilization in the first half of 2021. New annual benchmark data for manufacturing for 2017 and 2018 will be incorporated, as well as other annual data, including information on the mining of metallic and nonmetallic minerals (except fuels). The weights for market-group splits of the industry-level indexes will be updated with information from the 2012 benchmark input-output accounts from the U.S. Bureau of Economic Analysis. The updated IP indexes will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series may be changed. Any modifications to the methods for estimating the output of an industry will affect the index from 1972 to the present.

Capacity and capacity utilization will be revised to incorporate data for manufacturing through the fourth quarter of 2019 from the U.S. Census Bureau's Quarterly Survey of Plant Capacity Utilization, along with new data on capacity from the U.S. Geological Survey, the U.S. Department of Energy, and other organizations.

Note. The statistics in this release cover output, capacity, and capacity utilization in the U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.

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