The Federal Reserve's Factory Production report shows a +0.8% increase for March 2011 Industrial Production, or output for factories and mines. Here is their detailed report. February had a 0.1% increase in industrial production. Industrial Production is still down 6.3% from pre-recession levels.
Industrial production increased 0.8 percent in March and rose at an annual rate of 6.0 percent for the first quarter as a whole. Manufacturing output advanced 0.7 percent in March, its fourth consecutive month of strong expansion; factory production climbed at an annual rate of 9.1 percent in the first quarter. Outside of manufacturing, the output of mines rose 0.6 percent in March, while the output of utilities increased 1.7 percent after declining significantly in the preceding two months. At 93.6 percent of its 2007 average, total industrial production was 5.9 percent above its year-earlier level. The rate of capacity utilization for total industry rose 0.5 percentage point to 77.4 percent, a rate 3.0 percentage points below its average from 1972 to 2010.
Major industry groups breakdown of industrial production.
- Manufacturing: +0.7%
- Mining: +0.6%
- Utilities: +1.7%
Below is the graph of raw capacity, indexed against 2007 output. This is just how much capacity does the U.S. have to make stuff. Look at how total capacity has declined for the first time in the historical data. This index represents the raw facilities, potential to make stuff. Raw capacity is the underlying number by which utilization is calculated.
Below is the Federal Reserve graph for raw capacity and Industrial Production. Notice how at the start of 2000, when the China PNTR (trade agreement) kicked in, both literally level off to flat land. When I see this graph I think what has happened to American's industries is an absolute crime.
Below is the Fed's description of Market groups from the report and their monthly percent changes. Durables is doing well, up 2.1% in March and check out automotive products, a 3.06% monthly increase.
The production of consumer goods increased 0.9 percent in March and rose at an annual rate of 4.9 percent in the first quarter. In March, the output of consumer durable goods moved up 2.1 percent, with gains in nearly all of its major categories. The production of automotive products advanced 3.6 percent and was 15.4 percent above its year-earlier level. The index for home electronics increased 0.7 percent, and the index for appliances, furniture, and carpeting climbed 2.0 percent; however, the production of miscellaneous consumer durables decreased 0.4 percent. The output of non-energy nondurable goods rose 0.3 percent, as gains in chemical products and in paper products more than offset declines in clothing and in foods and tobacco. The output of consumer energy products advanced 1.3 percent, as residential sales by utilities increased but the production of fuels decreased.
The index for business equipment rose 0.4 percent in March after three months of gains of 1.0 percent or more. For the first quarter as a whole, the output of business equipment advanced at an annual rate of 15.3 percent with sizable increases in each of its three main components. For March, the output of transit equipment rose 1.8 percent, its third consecutive monthly increase, and the index for information processing equipment moved up 0.5 percent. The production of industrial and other equipment edged down for a second consecutive month; nonetheless, this index jumped at an annual rate of nearly 16 percent for the first quarter as a whole.
The production index for defense and space equipment gained 1.1 percent in March after having increased 2.2 percent the previous month. This index rose 5.9 percent during the 12 months ending in March.
Among nonindustrial supplies, the output of construction supplies rose 1.5 percent in March. This index has risen more than 12 percent from its trough during December 2009 but remains about 25 percent below its peak in December 2006. The production of business supplies increased 0.7 percent in March. Within business supplies, the index for commercial energy advanced 1.7 percent, and the index for non-energy business supplies moved up 0.3 percent--its fifth consecutive monthly increase.
The output of materials to be processed further in the industrial sector rose 0.8 percent in March after having edged down 0.1 percent in February. For the first quarter as a whole, the production of these materials increased at an annual rate of 5.4 percent, about the same pace as in the fourth quarter of 2010. The output of durable materials moved up 0.8 percent in March. The indexes for all of the major components of durable materials advanced; the largest gain was for equipment parts, which increased 1.2 percent. The output of nondurable materials rose 1.0 percent after having declined a similar amount in February. Among nondurable materials, increases in the production of both chemical materials and paper materials in March were partly offset by a decrease in the output of textile materials. The index for energy materials moved up 0.5 percent.
Below is another graph of industrial production since September 1990, indexed to that month. Look at the slope, the growth through the 1990's and then compare to 2000 decade. It was in 2000 when the China trade agreement kicked in and labor arbitrage of engineers, advanced R&D, I.T., STEM started in earnest.
Capacity utilization, or of raw capacity, how much is being used, for total industry is now 77.4%. But the Fed notes this is 3.0 percentage points below the average from 1972 to 2010. Manufacturing capacity utilization is down 0.9% for the year.
Below are capacity utilization's monthly percent change breakdown.
- manufacturing: +0.4%
- mining: +0.3%
- utilities: +1.2%
- selected high-technology industries: +0.5%
- crude: +0.5%
- primary: +0.6%
- finished: +0.5%
The below graphs show the overall decline of U.S. capacity utilization. Capacity utilization is how much can we make vs. how much are we currently using. These graphs show the U.S. is simply not producing what it is capable of, a reflection of the output gap. Note, this index is normalized to a specific year, currently from most reports, the 2007 yearly average (see year in the graph). Therefore, one cannot take absolute values of capacity utilization, i.e. 80%, and claim this is an indicator of a healthy economy, for it all depends on what year capacity utilization is normalized to. One can take the slope, or rate of change from the peak of a recession and determine recovery, but again, these percentages are relative, they are not absolute ratios to a static point in time. Also recall utilization is a percentage of real total capacity. Notice that total capacity in the United States has declined.
According to the report, manufacturing uses 77.8% of capacity, utilities 10.4% and mining 11.8%.
Below is the Manufacturing capacity utilization graph, normalized to 2007 raw capacity levels, going back to the 1990's. Too often the focus is on the monthly percent change, so it's important to compare capacity utilization to pre-recession levels and also when the economy was more humming.
Here are some more details on industrial production categories (market groups) from the Federal Reserve's report:
If you are baffled by what crude, finished mean, read these stages of production definitions.
The Federal Reserve releases detailed tables for more data, metrics not mentioned in this overview.