U.S. INDUSTRIAL PRODUCTION UP 0.4%
U.S. FRB - July 15, 2021- Industrial production increased 0.4 percent in June after moving up 0.7 percent in May. In June, manufacturing output edged down 0.1 percent, as an ongoing shortage of semiconductors contributed to a decrease of 6.6 percent in the production of motor vehicles and parts. Excluding motor vehicles and parts, factory output increased 0.4 percent. The output of utilities advanced 2.7 percent, reflecting heightened demand for air conditioning, as much of the country experienced a heat wave in June. The index for mining increased 1.4 percent.
For the second quarter as a whole, total industrial production rose at an annual rate of 5.5 percent. Manufacturing output increased at an annual rate of 3.7 percent despite a drop of 22.5 percent for motor vehicles and parts.
At 100.1 percent of its 2017 average, total industrial production in June was 9.8 percent above its year-earlier level but 1.2 percent below its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.3 percentage point in June to 75.4 percent, a rate that is 4.2 percentage points below its long-run (1972–2020) average.
Market groups posted mixed results in June. The drop in motor vehicle output contributed to decreases in consumer goods and business equipment. Defense and space equipment posted the largest gain among market groups, advancing 4.4 percent. The index for materials advanced 1.0 percent as a result of a gain in energy materials.
In June, manufacturing output edged down 0.1 percent and was 0.8 percent below its pre-pandemic level. Production of durable goods slipped 0.2 percent; in addition to the drop for motor vehicles and parts, declines of more than 1.0 percent were recorded by nonmetallic mineral products and by electrical equipment, appliances, and components. The output of nondurable goods rose 0.2 percent. The largest increases were recorded by printing and support activities and by petroleum and coal products, while the largest decreases were recorded by paper and by apparel and leather. The output of other manufacturing (publishing and logging) declined 0.8 percent.
The index for mining gained 1.4 percent in June and expanded at an annual rate of 25.6 percent in the second quarter. In June, oil and gas extraction increased 2.1 percent, but the index remained 6.0 percent below its pre-pandemic level. The index for utilities rose 2.7 percent in June but fell 2.2 percent in the second quarter.
Capacity utilization for manufacturing declined 0.1 percentage point in June to 75.3 percent. The operating rate for mining increased 1.1 percentage points to 76.7 percent, while the operating rate for utilities rose 1.8 percentage points to 74.5 percent. The rates for all three sectors remained below their long-run averages.
Note. The Federal Reserve typically publishes revised estimates of industrial capacity concurrent with the July release of industrial production and capacity utilization. Revised estimates of industrial capacity will not be published this year because an annual revision to industrial production and capacity utilization was issued on May 28, 2021. The next update to capacity will occur early next year when the Federal Reserve issues preliminary estimates for 2022.
Revision of Industrial Production and Capacity Utilization
The Federal Reserve Board issued its annual revision to the indexes of industrial production (IP) and the related measures of capacity utilization on May 28, 2021. The base year for the revised indexes is 2017. New annual benchmark data for manufacturing for 2017 through 2019 were 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 were updated with information from the 2012 benchmark input-output accounts from the U.S. Bureau of Economic Analysis. The updated IP indexes included revisions to the monthly production indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series were changed. Any modifications to the methods for estimating the output of an industry affected the index from 1972 to the present.
Capacity and capacity utilization were revised to incorporate data for manufacturing through the fourth quarter of 2020 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.