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Economy in Brief

U.S. Industrial Production Is Unchanged; Factory Output Jumped
by Tom Moeller   November 16, 2010

The capital goods sector of the economy raised industrial output last month. The headline figure of no-change in October industrial production owed to a 3.4% decline in utility output. Three-month growth in output overall dropped to 0.4% (AR) versus its 14.3% peak right after the recession ended.

Factory sector output alone, however, rose 0.6% after a little-revised 0.1% September slip. The capital goods sector led the strength with a 1.2% jump which was its strongest since May. On a three-month basis, output rose at a 6.5% rate though that is down from the 22.5% peak this past May. Industrial & other output was the strongest area and grew at an 8.9% rate. In the consumer sector, output was unchanged last month following two months of decline. Three-month growth fell to -3.7% as lower auto, appliance, and other durables output offset strong gains in clothing and food. Output of computers, video & audio equipment rose 0.2% last month and at a 2.8% rate during the last three.

Capacity utilization overall held steady at 74.8% and remained well above last year's low of 68.2%. A 74.9% October rate had been expected. The factory sector utilization rate, alone, rose to 72.7%. The increase here is from the low of 65.4% during the recession. But the figures continue to paint a picture of abundant unused productive capacity. The latest rates compare to roughly 80% just before the recession and a fifty year average also of 80%.

Of note is that declines in capacity started just after the recession ended. Overall capacity has fallen 0.4% during the last twelve months and excluding high-tech industries it's down 0.8%. Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database.

Industrial Production (SA, % Change) October September August Year Ago 2009 2008 2007
Total Output 0.0 -0.1 0.2 5.4 -9.3 -3.3 2.7
  Manufacturing 0.6 0.1 0.0 6.2 -11.1 -4.5 2.9
     Consumer Goods 0.0 -0.4 -0.5 2.6 -5.8 -4.2 0.9
     Business Equipment 1.2 0.2 0.2 10.4 -12.2 -1.5 4.5
     Construction Supplies 0.1 -0.4 1.0 7.6 -16.7 -9.5 -1.2
  Materials -0.1 0.2 0.6 6.7 -9.7 -2.7 3.7
  Utilities -3.4 -2.2 -1.0 -2.5 -2.6 -0.1 3.4
Capacity Utilization (%) 74.8 74.8 74.9 70.7 70.0 77.9 81.3
  Manufacturing 72.7 72.3 72.2 68.2 67.2 75.0 79.6
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