U.S. industrial production rose 0.5%; output jumped 0.6%

Industrial production rose 0.5 percent in June after a decrease of 0.1 percent in May, the Federal Reserve System reported on July 17. At 113.4 percent of its 2002 average in June, total industrial production was 1.4 percent above its year-earlier level. Manufacturing output moved up 0.6 percent in June; excluding motor vehicles and parts, factory output increased 0.4 percent after having been unchanged in May. In June, the output indexes for mining and utilities registered gains of 0.5 percent and 0.3 percent, respectively. For the second quarter as a whole, total industrial production advanced at an annual rate of 2.9 percent after an increase of 1.1 percent in the first quarter. Capacity utilization for total industry moved up to 81.7 percent in June; the rate was 0.6 percentage point below its level in June 2006 but 0.7 percentage point above its 1972-2006 average.

Market Groups

The production of consumer goods rose 0.7 percent in June and increased at an annual rate of 1.7 percent for the second quarter as a whole. In June, an increase of 1.6 percent in the production of durable consumer goods was due mainly to a jump in the production of consumer automotive products, which moved up 2.8 percent after a decrease of 0.9 percent in May. After little change in the first quarter, the production of automotive products surged at an annual rate of 20.7 percent in the second quarter. The output of home electronics recovered 2.6 percent in June after a decline of the same amount in May. The index for appliances, furniture and carpeting fell 0.5 percent in June; production increased at an annual rate of 0.8 percent in the second quarter after declines in each of the preceding six quarters. The index for miscellaneous durable goods moved up in June for a fourth consecutive month. The production of non-durable consumer goods rose 0.4 percent last month. Among non-energy non-durable consumer goods, a sharp decline in clothing in June was more than offset by increases in foods and tobacco, chemical products and paper products. An increase in the output of automotive gasoline boosted consumer energy output. In the second quarter, the output of non-energy non-durable consumer goods increased at an annual rate of 0.4 percent, whereas the output of consumer energy products fell at an annual rate of 6.6 percent.

The index for business equipment was unchanged in June for a second consecutive month, but it advanced at an annual rate of 3.6 percent in the second quarter. Higher output of motor vehicles and civilian aircraft contributed to a June gain of 1.0 percent for transit equipment, and the output of information processing equipment moved up 0.4 percent. The index for industrial and other equipment slipped 0.6 percent; farm machinery and construction machinery registered large declines. The production of defense and space equipment rose 0.7 percent.

The index for construction supplies increased 1.0 percent in June; it was up at an annual rate of 3.6 percent in the second quarter, its first quarterly increase since the second quarter of 2006. In June, the index for business supplies rose 0.2 percent; non-energy business supplies moved up 0.4 percent, but commercial energy supplies fell 0.4 percent.

The production of materials advanced 0.6 percent in June. Within non-energy materials, the output of durable materials rose 0.9 percent in June and moved up at an annual rate of 7.2 percent in the second quarter. All major categories within durable materials posted gains in June. Among nondurable materials, a decline in the output of textiles was more than offset by increases in the production of paper and of chemicals. The output of energy materials edged up 0.1 percent.

Industry Groups

Manufacturing output rose 0.6 percent in June, and the factory operating rate advanced 0.4 percentage point, to 80.3 percent. For the second quarter as a whole, output increased at an annual rate of 3.4 percent. In June, the production of durable goods rose 0.8 percent, an increase led by a gain of 2.5 percent in the output of motor vehicles and parts. In the second quarter, the output of motor vehicles and parts advanced at an annual rate of 13.3 percent after decreases in each of the previous three quarters. Among the other major categories within durable goods, increases were generally widespread in June. The production of nondurable goods rose 0.3 percent in June; in the second quarter, it edged up at an annual rate of 0.3 percent. Advances in June occurred in food, beverage, and tobacco products; paper; chemicals; and plastics and rubber products. However, textile and product mills, apparel and leather, printing, and petroleum and coal products all declined. The output of the non-NAICS manufacturing industries (logging and publishing) rose 0.5 percent.

The output of utilities edged up 0.3 percent in June; electricity generation inched down 0.1 percent, but the output of natural gas utilities increased 2.4 percent. The operating rate at utilities rose to 85.6 percent, a rate about 1 percentage point below its 1972-2006 average. In June, the output of mines increased 0.5 percent, and the capacity utilization rate for mining rose 0.5 percentage point, to 90.7 percent, a rate 3.3 percentage points above its long-run average.

In June, capacity utilization for industries in the crude stage moved up 0.4 percentage point, to 89.5 percent. For industries in the primary and semifinished stages, capacity utilization rose 0.4 percentage point, to 82.4 percent; for industries in the finished stage, capacity utilization increased 0.2 percentage point, to 78.3 percent. The utilization rates for the three stages of processing were all above their long-run averages.

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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