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FEDERAL RESERVE statistical release i
G.17 (419) Supplement

For immediate release
February 4,1994

INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION (A REVISION)
The Federal Reserve index of industrial production (IP) and the related measures of capacity and
utilization have been updated. The revisions of the estimates of production begin in 1991 and mainly incorporate
more comprehensive monthly source data, results of a review of productivity relationships, and updated seasonal
factors. The revisions of the capacity indexes and utilization rates begin in 1990 and primarily reflect the results
for 1991 and 1992 of the U.S. Bureau of the Census's Survey of Plant Capacity Utilization and a review of the
relationships of capacity output to industry capital stocks. The estimates of capital stocks used to prepare the
capacity estimates have been updated and improved.
Although estimates for some of the series were revised noticeably, the overall effect on the total
production index was very small (in fact, the effect on production estimates cannot be seen in chart 1). For the
fourth quarter of 1993, the revised production index was 112.9 percent of 1987 output, compared with
113.1 percent shown previously.1 Total industrial capacity growth is now estimated to have been about a quarter of
a percent per year higher in 1992 and 1993. As a result, the rate of capacity utilization—the ratio of production to
capacity—was revised down about half a percentage point, to an estimated 82.3 percent in the fourth quarter of
1993.
Led by continuing strength in the output of computer and office equipment and rebounding production
of motor vehicles and parts during the last four months of 1993, industrial output is now estimated to have
advanced 4-1/4 percent over the four quarters of the year, more than double the 1.9 percent gain in capacity. As a
result, the rate of utilization of industrial capacity rose about 2 percentage points. Utilization of the nation's
factories, mines, and utilities is now shown to have surpassed the 1967-93 average by about a percentage point by
the end of 1993 but to have remained well below earlier cyclical highs.
Aspects of the revision
Industrial Production. The revisions to the estimates of production reflect (1) the incorporation of
monthly, quarterly, and, in some cases, annual output data that were not available in time for inclusion in the
monthly publications during the past year; (2) use of updated seasonal adjustment factors;2 and (3) a review of
output indexes based on monthly input measures.
Input measures, either hours worked by production workers or kilowatt-hours of electricity consumed
by industry, are used to estimate monthly production indexes for more than half of industrial production. The
input-based series were revised in three ways. First, the monthly production worker hours data were updated to
include the benchmark adjustments introduced by the Bureau of Labor Statistics in late spring 1993. Second, the

1. The production and utilization data for the fourth quarter are based on information available as of January 28. These
figures are subject to further revision in the monthly statistical releases due to be published on the 15th of February, March,
and April.
2. In the seasonal adjustment process, an effort was made to reconcile seasonal factors at the individual and aggregate
levels to achieve consistency. For series based on production-worker hours, the current seasonal factors were estimated
using data through October 1993; for other series, the factors were estimated using data through July 1993.



data for consumption of electric power by industry were statistically filtered for outliers. Third, new productivity
factors based on productivity trends derived from annual input and output data through 1991 were applied to input
data since 1991.
By major market group (table 2), output of consumer goods was revised up slightly despite a small
downward revision to the rapid gains in the output of consumer durables in 1992 and 1993. Output of nondurable
consumer goods advanced over the past three years at an average annual rate of only 1-1/2 percent, even after
upward revisions. Growth in production of equipment in both 1992 and 1993 was revised down about a percentage
point. The production of business equipment remained relatively strong; the weakness in commercial aircraft and
defense and space industries was intensified. The production of industrial materials was revised little, and
continues to show an acceleration of growth in 1992 and 1993 after the weakness in 1990 and 1991. The recovery
in output of construction supplies was more moderate than had been previously estimated, and the recovery in
production of business supplies, which had earlier been shown to be quite weak, was revised up.
By major industry group (table 3), several individual series were revised noticeably for 1992 and
1993. Upward revisions in nondurable manufacturing, particularly printing and publishing, were significant. In
contrast, among durable manufacturing industries, downward revisions were noticeable for furniture and fixtures,
machinery, miscellaneous manufactures, aerospace and miscellaneous transportation equipment, and stone, clay,
and glass products.
Capacity and Capacity Utilization. The capacity indexes, which are designed to accompany the
production indexes for major industry groups, have also been revised. Preliminary end-of-year indexes of capacity
for many industries are calculated by dividing a production index by a utilization rate obtained from a survey.
Thus the revised production indexes, as well as manufacturing utilization rates for the fourth quarters of 1991 and
1992 recently provided by the Bureau of the Census from their Survey of Plant Capacity Utilization, were key
factors in updating the Federal Reserve capacity indexes. In addition, output and capacity data that are available in
physical units, such as tons of steel and wood pulp or counts of motor vehicles, were updated.
With the exception of 1991, the revised Federal Reserve capacity estimates are generally consistent
with the implicit capacity estimates for 1990-92 derived from the Census Bureau's utilization survey (chart 2).
The Federal Reserve method of estimating capacity from survey data smooths through the 1991 drop in the implied
capacity from the Census survey, in large part because available estimates of the capital stock continued to expand
in 1991.3 A review of the available evidence suggests that the decline in the implied capacity from the Census
may be, in part, a cyclical phenomenon.4 The growth of manufacturing capacity in 1993 was revised upward
because the new estimates of the capital stock increased at a slightly faster rate than the previous estimates.
Although capacity indexes for mining, leather, steel, and aerospace and miscellaneous transportation
equipment were lowered, capacity growth, on balance, was raised because of upward revisions in capacity for
various nondurable manufacturing industries as well as for stone, clay, and glass products, copper, autos and light
trucks, and especially computers and office equipment (table 4).
For some industries, revisions in utilization parallel those in the production index. Utilization for
durable manufacturing in the fourth quarter of 1993 was lowered about 1-3/4 percentage points, to 80.6 percent

3. New real net capital stock measures for manufacturing have been estimated using the perpetual inventory method.
Elements included are (1) time series of investments in new equipment and structures by three-digit manufacturing
industries; (2) corresponding decompositions of the annual investments into twenty-eight asset types; (3) asset-type
deflators and service lives: and (4) estimates of losses in capital efficiency due to discards and economic decay as assets
age. The capital stock estimates incorporate not only historical investment expenditures through 1991 from the Censuses
and Annual Surveys of Manufactures, but also 1992-94 updates based on plant and equipment expenditures and plans
reported by the Census Bureau.
4. The Census questionnaire instructs respondents to define full production capacity in terms of a "normal" level of plant
operating hours. However, many industries that reported large declines in implied capacity in 1991 also reported
substantial cuts in actual plant operating hours, suggesting that the current economic environment may dominate some
respondents' perceptions of capacity.



1. Industrial production, capacity, and utilization
Ratio scale, 1987 output = 100

145

I45 i
— Revised
-—Earlier
^

135
Capacity

—

^o^^

^ * ^

125

125

115

115
Production

AS ^

105

95

135

^

y*s

Xs*

V

— 4 105

L_

95

_J
—J 85

85

•

7R

1979

i

i
1981

I

1

1
1

1983

l __ J

1985

L

I

1987

I

I

1989

I

I

1991

J

75

1993

Percent of capacity
90

Utilization

— I 85

— 4 80

—

I
1979




1981

1983

I
1985

l_l
1987

I

L
1989

I

I
1991

I

L
1993

75

70

(table 5). In contrast, utilization for nondurable manufacturing was revised up. Printing and publishing and also
furniture and fixtures are examples of industries in which revised production indexes led to revised utilization
rates. The largest downward revision in operating rates was for computers and office equipment; this change was
based, in part, on the results of the Census survey, which showed that utilization for this industry remained near its
average level in late 1992. As a result, capacity growth for computer and office equipment from 1990 to 1993 now
averages about 14 percent per year, still below the rapid growth of output in 1992 and 1993.

2. FRB Capacity and Census Implied Capacity
Ratio scale, 1987 output == 100

140

—

— 140

-

120

Implied Capacity,
Census Preferred
i

^-^*"" *"^

^**^*^

Implied Capacity,
Census Full Production

—

120

^ - ^ ^ " ^

II

^ ^ ^ " " F R B Mfg. Capacity
100

y ^

Manufacturing IP

100

^^f^^^

90

80

—

—

75
70
65

—

I

I

l __J

I

I

I

I

I

I_ _ J

I

I

I

I

I

1978
1980
1982
1984
1986
1988
1990
1992
The Census survey implied capacity is calculated by dividing IP by the survey utilization rate; to make the result comparable
with the FRB capacity, the calculation is adjusted downward by the average difference between the Census utilization rate and
McGraw-Hill/DRI utilization rate for 1977 to 1988. Until 1988, the Census preferred utilization rate related actual production
to a preferred level of operations; beginning in 1989, the Census changed its definition to full production utilization, which
related actual output to full production capability.

Data Availability and Publication Changes
Diskettes containing either historical data (through 1985) or more recent data (1986 to those
most recently published in the G.17 statistical release) are available from Publications Services, Board of
Governors of the Federal Reserve System, Washington, DC 20551 (202-452-3245). Files containing the
revised data and the text and tables from this release are also available through the Economic Bulletin
Board of the Department of Commerce; for information, call 202-482-1986.
A document with printed tables of the revised estimates of series shown in the G.17 release is
available upon written request to the Industrial Output Section, Mail Stop 82, Division of Research and
Statistics, Board of Governors of the Federal Reserve System, Washington, DC 20551.
Capacity utilization and capacity data are now being published for the computer and office
equipment industry. Historical data for these series have been added to the diskettes available; tables
showing the histories of the series are also available upon written requestfromthe Industrial Output
Section.




80
75

—

—
:

90

—

85

—j
—

70

I

85

65
1994

Table 1
INDUSTHIAL PRODUCTION, CAPACITY AND UTILIZATION: 1987-1993 1
TOTAL INDUSTRY

,«"" *

Seasonally adjusted*V
Year

Jan.

Feb:

Mar.

Apr-

industrial
Production,
Percent
Change
1990
1991
1992
1993

--.5
\-4
-.3
2

.5
-1.1
.8
.6

,3
-.8
.5
.1

-:7
.2
.7
.4

Industrial
Production
1990
1991
1992
1993

105.5
104.2
104.3
109.2

106.1
103.0
105.2
109.9

106.4
102.3
105.6
110.0

Capacity
1990
1991
1992
1993

128.2
130.6
132.7
135.0

128.4 128.6
130.8 131.0
132.9 •133.1
135.3 135.5

Utilization
1990
1991
1992
1993

May

June

July

Au

g-

Sep. -

Oct.

Nov.

Dec.

x
t

Q2

Q1

Q3

- Q4

Annual2

-. '
-

,K~

2.1
-7.8
.3
5.2

1.1
1.0
5.6
2.3

1.6
'" 5.7
' .6
2.8

-5.2
.3
'6.4
6.8

.0
-1.8
2.3
4.1

104.5'
104.6
109.0
113.8

108.0
103.2
105.0
109.7

106.3
103.4
106.5
110.3

106.7
104.9
106.6
111.1

105.3
104.9
108.3
112.9

106.0
104.1
106.5
110.9

130.2
132.4
134.6
137.2

130.4
132.6
134.8
137.4

128.4
130.8
132.9
135.3

129.0
131.3
133.5
135.9

1,29.6
131.8
134.1
136.5

130.2
129.3
131.6
132.4
>
.134.6 > ' 133.8
136.2
137.2

81.8
79.6
80.0
81.8

80.6
79.3
80,4
82.4

80.2
78.9
80.8
82.8

82.5
78.9
79.0
81.1

82.4
78.8
79.8
81.2

82.3
79.5
79.5
81.4

80.9
79.3
80.4
82.3

82.0
79.1
79.7
81.5

.7
.9
A
-.4

.2
.9
-.5
.3

-.2
.2
.5^
.4

.3
.1
-.3
.2

.0
.8
.1
.2

-.5
-.2
.9
.7

-1.3
-.2
.7
.9

105.7
102.5
106.4
110.5

106.5
103.4
106.8
110.0

106.7
104.3
106.2
110.4

106.5
104.5
106.8
110.9

106.8
104.6
106.5
111.1

106.8
105.4
106.8
111.3

106.3
105.2
107.5
112.0

105.0
105.0
108.3
113.0

128.8
131.1
133.3
135.7

129.0
131.3
133.5
135.9

129.2
131.5
133.7
136.1

128.4
131.7
133.9
136.3

129.6
131.8
134.1
136.5

129.8132.0
134.3
136.8

130.0
132.2
134.5
137.0

82.1
82.5
78.2 * 78.7
79.8
80.0
81.4
81.0

82.5
79.3
79.5
81.1

82.3
,79.4
79.8
81.3

82.4
79.4
79.4
81.4

82.3
79.9
79.4
81.4

-.4
-.3
.6
.7

*„

82.3
79.8
78.6
80.9

82.6
78.8
79.1
81.2

"82.7
78.1
79.4
81.2

MANUFACTURING

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sep.

Oct.

Nov.

Pec.

Q1

Q2

Q3

Q4

Annual2

-.1
-.7
-.4
.5

.9
-1.1
.9
.4

.4
-.9
.5
.2

-.9
.3
.7
.7

.5
.8
.4
-.2

.0
1.0
-.4
.1

-.3
.3
.4
.4

.5
.2
-.1
.1

-.1
.9
.1
.3

-.6
-.2
.9
.8

-1.2
-.3
.8
1.1

-.5
.0
.5
.7

3.7
-9.1
1.2
6.0

.2
.8
6.1
3.3

1.0
6.9
.9
2.4

-5.5
1.1
6.5
8.3

-.3
-2.2
3.0
4.6

Industrial
Production
1990
1991
1992
1993

105.5
103.7
104.4
109.9

106.5
102.6
105.3
110.4

107.0
101.7
105.9
110.5

106.0
102.0
106.6
111.3

106.6
102.8
107.1
111.1

106.6
103.8
106.7
111.2

106.3
104.1
107.1
111.6

106.9
104.3
106.9
111.8

106.8
105.3
107.0
112.1

106.2
105.1
107.9
113.0

104.9
104.8
108.8
114.3

104.4
104.7
109.3
115.0

106.3
102.7
105.2
110.3

106.4
102.9
106.8
111.2

106.6
104.6
107.0
111.8

105.1
104.9
108.7
114.1

106.1
103.7
106.8
111.7

Capacity
1990
1991
1992
1993

129.6
132.3
134.7
137.4

129.8
132.5
134.9
137.7

130.0
132.7
135.2
137.9

130.3
132.9
135.4
138.2

130.5
133.1
135.6
138.4

130.7
133.3
135.8
138.7

130.9
133.5
136.1
138.9

131.2
133.7
136.3
139.2

131.4
133.9
136.5
139.5

131.6
134.1
136.7
139.7

131.8
134.3
137.0
140.0

132.0
134.5
137.2
140.2

129.8
132.5
134.9
137.7

130.5
133.1
135.6
138.4

131.2
133.7
136.3
139.2

131.8
134.3
137.0
140.0

130.8
133.4
135.9
138.8

81.4
78.4
77.5
80.0

82.0
77.4
78.1
80.2

82.3
76.7
78.3
80.1

81.4
76.8
78.7
80.6

81.7
77.2
78.9
80.2

81.5
77.9
78.5
80.1

81.2
78.0
78.7
80.3

81.5
78.0
78.5
80.3

81.3
78.6
78.4
80.4

80.7
78.4
78.9
80.9

79.6
78.0
79.4
81.6

79.1
77.9
79.7
82.0

81.9
77.5
77.9
80.1

81.5
77.3
78.7
80.3

81.3
78.2
78.5
80.3

79.8
78.1
79.4
81.5

81.1
77.8
78.6
80.6

Year
Industrial
Production,
Percent
Change
1990
1991
1992
1993

Utilization
1990
1991
1992
1993

1. Estimates from October 1993 through December 1993 are subject to further revision in the upcoming monthly releases.
2. Annual averages of industrial production are calculated from not seasonally adjusted indexes.




S

Table 2
Rates of growth in industrial production, by major market group, 1990-1993 1

Item
Total index
Products, total
Final products
Consumer goods
Durable
Automotive products
Other durable goods
Nondurable
Equipment, total
Business equipment
industrial
Information processing & related
Transit
Other
Defense and space equipment
Intermediate products
Construction supplies
Business supplies
Materials
Durable
Nondurable
Energy

1990

Revised index
(percent)
1991
1992

1993

Difference between
revised and earlier indexes
(oercentaae points)
1990
1991
1992

1993

-.2

-.3

3.2

4.3

.0

.0

.0

-.2

-.4
-.1
-1.8
-8.3
-11.7
-5.4
.1

-.6
-.1
2.3
5.0
5.0
4.9
1.6

3.9
4.1
3.2
6.4
11.7
2.1
2.4

4.0
4.1
2.3
9.2
12.6
6.2
.4

.0
.0
.0
.0
.0
.0
.0

.1
-.1
.2
.3
.1
.4
.2

.2
-.3
.4
-.2
.8
-1.0
.6

-.3
-.4
.2
-.7
.0
-1.3
.4

2.3
3.0
-1.4
6.2
7.0
-2.2
-.9

-3.1
-.5
-5.9
1.1
7.7
-4.8
-8.7

5.2
8.7
3.6
16.4
-1.1
6.3
-10.3

6.6
10.0
4.1
16.1
1.5
10.6
-9.4

.0
.0
.0
.0
.0
.0
.0

-.4
-.1
.0
-.4
.2
.4
-1.2

-1.4
-1.1
-2.5
.2
-2.2
-1.5
-2.5

-.9
-1.0
-2.2
.4
-1.5
-3.5
-1.5

-1.6
-4.3
.2

-2.5
-4.5
-1.2

3.1
3.4
2.9

3.8
5.0
3.0

.0
.0
.0

.7
.4
.9

1.5
-1.0
3.1

.2
-1.2
1.1

.2
-.1
.7
.2

.1
-.3
1.2
-.1

2.2
3.4
2.1
.1

4.6
8.1
3.2
-.8

.0
.0
.0
.0

-.1
-.1
-.1
-.2

-.2
-.6
-.1
.4

-.1
.0
-.1
-.1

1. Growth rates are calculated as the percent change in the seasonally adjusted index from the fourth quarter of the previous year to the fourth
quarter of the year specified in the column heading.




6

Table 3
Rates of growth in industrial production, industry groups, 1990-19931

Item

SIC

_________

1990

Revised index
(percent)
1991
1992

1993

Difference between
revised and earlier indexes
(percentage points)
1991
1992
1990

1993

Total index

-.2

-.3

3.2

4.3

.0

.0

.0

-.2

Manufacturing

-.2

-.3

3.6

5.0

.0

.0

-.1

-.2

-1.2
.2

-.7
-.1

2.8
4.0

4.3
5.3

.0
.0

.1
.0

-.1
-.1

.0
-.2

-.7
-8.5
-4.2
-3.3

-.9
.7
-1.2
-6.7

4.3
8.4
3.7
5.1

7.6
4.7
5.7
3.2

.0
.0
.0
.0

-.1
.2
-.1
-.2

-1.1
1.3
-2.9
-.8

-.7
-1.1
-3.2
-1.9

Primary metals
33
iron and steel
331,2
Raw steel
Nonferrous
333-6,9
Fabricated metal products
34
Industrial machinery
and equipment
35
Computer and office equip
357
Electrical machinery
36

.9
2.9
5.6
-2.0
-3.0

-3.4
-5.2
-8.2
-.7
-2.3

.8
1.3
1.7
.2
1.0

6.4
8.0
5.8
4.0
4.9

.0
.0
.0
.0
.0

.5
.5
-.3
.3
.0

-.1
.0
-.1
-.2
-1.3

.9
.7
.2
1.2
-.1

1.7
11.0
-.2

-2.7
2.0
2.5

13.3
31.8
5.2

17.5
33.8
11.0

.0
.0
.0

-.1
.1
-1.0

-1.9
.7
-2.9

-.5
-.6
.2

37
371
372-6,9
38
39

-1.2
-7.2
-11.1
4.1
2.0
-1.1

.6
9.4
12.3
-6.2
-.5
.7

-.2
10.5
11.2
-10.0
.0
.7

3.6
16.7
17.0
-10.8
-2.1
2.1

.0
.0
.0
.0
.0
.0

.1
1.2
.7
-.8
.2
-.4

-.4
.3
2.7
-1.3
1.6
-2.9

-1.5
-1.6
.6
-1.8
-.4
-.8

20
21
22
23
26

.4
1.7
.0
-5.2
-4.6
2.6

.5
1.0
-9.5
6.7
4.4
1.2

2.8
1.9
9.7
5.1
.1
.1

1.7
1.1
-12.0
1.3
-1.7
5.0

.0
.0
.0
.0
.0
.0

.3
.4
-.5
.2
.3
.0

1.1
1.1
.7
.7
1.7
.2

.5
.3
-.5
.0
1.2
.5

27
28
29
30
31

-.7
1.4
-.1
.6
-7.5

-2.1
.7
-.9
1.2
-4.3

3.1
3.3
3.5
4.9
.1

.9
2.5
2.9
5.0
• ^ . 1

.0
.0
.0
.0
.0

1.2
-.3
.0
.5
-1.7

5.0
-.5
.7
1.1
-8.4

1.4
.5
-.5
1.0
-7.3

10
12
13
14

2.6
4.4
1.4
3.0
.6

-3.4
.5
-2.5
-3.5
-7.5

-.5
5.1
-.7
-1.1
.6

-.6
6.4
-3.2
-.9
1.2

.0
.0
.0
.0
.0

-.1
-.4
-.3
-.1
.4

.4
-1.4
2.0
.2
-.4

-.5
1.3
-1.4
-.6
-.3

491,3pt
492,3pt

-2.0
-.6
-6.8

2.4
1.2
6.9

1.9
2.1
1.3

1.1
.5
3.3

.0
.0
.0

-.1
-.1
.0

-.1
.2
-.9

.4
.1
1.6

Primary processing
Advanced processing
Durable
Lumber and products
Furniture and fixtures
Stone, clay, and glass products

Transportation equipment
Motor vehicles and parts
Autos and light trucks
Aerospace and misc.
Instruments
Miscellaneous
Nondurable
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products

Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastics products
Leather and products
Mining
Metalmining
Coal mining
Oil and gas extraction
Stone and earth minerals
Utilities
Electric
Gas

24
25
32

1. Growth rates are calculated as the percent change in the seasonally adjusted index from the fourth quarter of the previous year to the fourth
quarter of the year specified in the column heading.




Table 4
Rates of growth in capacity, industry groups, 1990-19931

sic

item
Total index

1998
1.9

Manufacturing

2.1

Revised inde>
foercent)
1991
1992'

1993

Difference between
revised and earlier indexes
(percentaae points)
199©
1991
1992

1993

1.7

1.9

1.9

.1

.1

.2

.3

2.0

1.7

2.2

.0

.1

.2

.4

.2
.0

.3
.2

.2
.5

Primary processing
Advanced processing

1.7
2.3

1.1
2.2

1.0
2.4

1.1
2.7

.0
.0

Durable
Lumber and products
24
Furniture and fixtures
25 i
Stone, clay snd glass products 32

2.1
.6
2.2
.7

1.8
.1
.7
.3

2.1
.2
.8
.9

2.6
.7
1.3
1.1 j

.0
.5
.1
.3

-.1
1.1
.0
.6

.1
.0
-.2
.9

.5
.2
.0
1.0

33
Primary metals
331,2
Iron and steel
Raw steel
333-6,9
Nonferrous
34
Fabricated:metal products
Industrial machinery
and equipment
35
Computer and office equip
357
Eiectricai machinery
36

.6
.9
.0
.0
.3

-1.0
-1.2
-1.6
-.6
-.1

-1.4
-2.3
-2.2
-.1
-.2

-1.2
-1.9
-2.0
-.1
-.2

.0
.0
.0
-.1
-.2

-.3
.0
.0
-.7
-.2

-.4
-.9
-1.0
.3
-.2

-1.1
-2.2
-2.1
.5
-.2

4.7
15.3

3.6

5.3
14.4
2.7

5.3
13.4
2.9

5.9
14.0
5.0

1.7
5.8
-.5

.9
2.3
-.4

1.3
36
-.7

1.6
4.1
.9

372-6,9
38
39

1.0
1.1
.8
.8
1.3
1.6

.8
1.7
1.0
-.1
1.3
1.7

2.0
3.5
4.8
.4
1.4
1.7

1.3
3.6
3.7
-1.0
1.5
1.6

-.6
-.8
.7
-.5
-1.0
-.3

-1.0
-1.1
.7
-1.0
-.6
.1

-.2
-.8
.4
.3
-.2
.2

.1
.9
.6
-.6
.1
-.5

20
21
22
23
26

2.1
1.4
-.4
1.6
.1
2.9

2.0
2.1
-A
1.0
-.5
2.4

1.8
2.5
-.4
1.0
-.8
1.8

1.7
2.5
-.4
1.7
-.8
1.6

.0
.1
-.4
.3
-.1
.3

.3
.7
-.4
.2
-.1
.2

.4
1.0
-.4
.4
-.2
.4

.2
.9
-.4
1.0
-.4
.2

27
28
29'
30 i
31

2.9
2.5
.9
4.0
-3.5

1.6
2.9
-.8
3.4
-3.5

.7
2.6
-1.3
3.3
-3.6

.7
2.4
-.5
3.0
-3.8

.1
-.5
.0

.2
.3
.0
3
-2.3

.3
.1
.8
-2.8

-.1
-.3
.3
.2
-3.3

10
12
13
14

-1.4
5.3
2.1
-3.0
-.1

-.6
2.2
2.1
-1.5
-.5

-1.0
1.6
1.0
-1.9
-.2

-1.1
1.5
1.1
-2.0
-.1

.1
-.3
.0
.2
.0

.0
.2
-.2
.0
.0

-.3
-.3
-.4
-.2
.0

491,3pt
492,3pt

2.4
3.2
.0

1.4
1.8
.0

1.2
1.5
.0

1.0
1.4
.0

.3
.4
.0

-.1
-.2
.0

-.1
.0
.0

Transportation equipment
Motor vehicles and parts
Autos and light trucks
Aerospace and misc.
Instruments
Miscellaneous

37
371

rlondurable
Foods
Tobacco priDducts
Textile mill ^products
Apparel products
Paper and products
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastics products
Leather and products
Mining
Metalmining
Coal mining
Oil and gas extraction
Stone and earth minerals
Utilities
Electric
Gas

.0
-.3
.0
.0
.0
.0
.0
.7
.0

.0

%, Growth rates are calculated as the percent change in.tl^ seasonallyacijusted index Jrom the fourth, quarter of the previous year to the fourth
quarter of the year specified in the column heading;




8T

Table 5
Revised and earlier capacity utilization rates, by industry group
Percent of capacity, seasonally adjusted
Difference between ———
revised and earlier indexes
(percentage points)
19901991
1992
1993
Low
Q4
Q4

Revised index
T5§7^
1993
Ave.

1988^"
1989
High

19901991
Low

1992
Q4

1993
Q4

Total industry

81.9

84.8

78.1

80.4

82.3

-.2

-.2

-.6

Manufacturing

81.2

85.1

76.7

79.4

81.5

.1

-.2

-.7

82.2
80.6

89.1
83.3

78.0
76.0

82.3
78.1

84.9
80.1

.1
-.1

-.4
-.2

-.6
-.7

79.0
83.1
81.7
77.8

83.9
93.3
86.8
83.7

73.8
76.2
71.6
71.6

76.8
87.3
77.6
75.5

80.6
90.8
80.9
77.1

•0
-.7
-1
.6

-.9
-.3
-2.2
-2.2

-1.8
-1.5
-4.8
-4.6

Primary metals
33
Iron and steel
331,2
Raw steel
Nonferrous
333-6,9
Fabricated metal products
34
Industrial machinery
and equipment
35
Computer and office equip
357
Electrical machinery
36

80.0
79.7
79.2
80.9
77.2

92.9
95.7
92.7
88.9
82.0

74.4
72.2
71.4
75.8
72.0

82.2
82.1
81.7
82.3
74.5

88.5
90.3
88.2
85.7
78.3

.1

.2

1.0
1.3
.6
.5
-.6

2.7
3.8
2.6
1.2
-.5

80.8
80.5
80.4

83.7
84.4
84.9

71.4
63.4
77.3

77.3
74.4
79.6

85.8
87.4
84.1

-1.7
-4.0
.6

-4.4
-7.6
-1.6

-6.6
-12.9
-2.3

37
371

74.9
75.7
75.5
82.0
75.6

70.5
57.3
53.7
78.5
76.1
72.9

73.1
74.9
75.8
71.2
75.8
74.8

74.8
84.4
85.6
64.1
73.1
75.2

•4

372-6,9
38
39

84.2
84.5
89.6
88.3
81.2
80.1

-.6
•0
•4
1.1
.0

1.1
2.9
1.0
-.8
2.7
-2.4

.0
1.4
1.1
-1.6
2.2
-2.7

20
21
22
23
26

83.5
82.3
91.6
86.2
81.1
89.7

86.8
83.3
102.4
92.1
84.2
94.9

80.4
80.8
79.3
78.5
74.9
86.3

82.8
81.0
92.5
90.0
80.5
87.7

82.8
79.8
81.8
89.6
79.7
90.7

.0
.0
-.3
-.2
.3
.3

.6
-.2
1.3
-.1
1.9
-.7

.9
-.7
1.0
-1.1
3.2
-.5

27
28
29
30
31

86.5
80.0
85.5
83.6
81.9

92.3
85.9
88.5
90.5
83.8

78.5
79.4
84.5
78.3
76.4

81.7
80.9
90.3
82.7
81.9

81.9
81.0
93.5
84.3
81.6

.1
.9
.4
-.2
.9

4.4
-.6
.6
.4
-3.5

5.6
.1
.0
1.1
-6.9

10
12
13
14

87.4
78.3
87.0
88.3
83.8

87.0
87.5
91.4
86.9
90.0

86.8
80.0
82.9
87.8
77.9

87.6
85.9
83.1
90.0
79.5

88.0
90.1
79.6
91.1
80.5

.0
.6
-.2
.0
.3

.1
-1.4
1.6
-.1
.0

-.1
.0
.7
-.3
-.3

491,3pt
492,3pt

86.7
88.8
82.5

92.6
94.8
85.5

83.1
86.3
68.3

86.2
88.0
80.1

86.3
87.3
82.7

-.3
-1.1
.0

-.8
-.9
-.6

-.4
-.8
.6

Item

SIC

Primary processing
Advanced processing
Durable
Lumber and products
Furniture and fixtures
Stone, clay, and glass products

Transportation equipment
Motor vehicles and parts
Autos and light trucks1
Aerospace and misc.
Instruments
Miscellaneous
Nondurable
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products

Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastics products
Leather and products
Mining
Metal mining
Coal mining
Oil and gas extraction
Stone and earth minerals
Utilities
Electric
Gas

24
25
32

-• 1

•2

-• 1

!

1. Series begins in 1977.
Note—The "high" columns refer to periods in which utilization generally peaked; the "low" columns refer to recession years in which utilization
generally bottomed out. The monthly highs and lows are specific to each series, and all did not occur in the same month.




Explanatory Note
The statistical release of Industrial Production and Capacity Utilization reports
measures of output, capacity, and capacity utilization in manufacturing, mining, and
the electric and gas utilities industries. It also includes survey data on the use of
electric power in manufacturing and mining. Data in the release are available on-line
on the day of issue through the Economic Bulletin Board of the Department of
Commerce. For information, call (202) 482-1986. Diskettes containing historical
data and the data published in this release are available from the Board of Governors
of the Federal Reserve System, Publications Services, (202) 452-3245.
Industrial

Production

Coverage. The industrial production (IP) index measures output in the
manufacturing, mining, and electric and gas utilities industries. For the period since
1987, the total IP index has been constructed from 255 individual series based on the
1987 Standard Industrial Classification (SIC). These individual series are classified
and grouped in two ways: (1) market groups (shown in table 1), such as consumer
goods, equipment, intermediate products, and materials; and (2) industry groups
(shown in tables 2 and 6), such as two-digit SIC industries and major aggregates of
these industries—for example, durable and nondurable manufacturing, mining, and
utilities.
Market groups. For purposes of analysis, the individual IP series are grouped into
final products, intermediate products, and materials. Final products are assumed to be
purchased by consumers, businesses, or government for final use. Intermediate
products are expected to become inputs in nonindustrial sectors, such as
construction, agriculture, and services. Materials are industrial output requiring
further processing within the industrial sector. Total products comprise final and
intermediate products, and final products are divided into consumer goods and
equipment.
Timing. The first estimate of output for a month is published around the 15th of the
following month. The estimate is preliminary (denoted by the superscript "p" in
tables) and subject to revision in each of the subsequent three months as new source
data become available. (Revised estimates are denoted by the superscript "r" in
tables.) After the fourth month, indexes are not revised further until the time of an
annual revision or a benchmark revision. The last three benchmark revisions were
published in 1990, 1985, and 1976. In 1993, a revision that converted the indexes to
the 1987 SIC from 1987 forward was published.
Source data. In annual or benchmark revisions, the individual IP indexes are
constructed from a variety of source data, such as the quinquennial Censuses of
Manufactures and Mineral Industries and the Annual Survey of Manufactures,
prepared by the Bureau of the Census; the Minerals Yearbook, prepared by the
Bureau of Mines; and publications of the Department of Energy. On a monthly basis,
the individual indexes of industrial production are constructed from two main types
of source data: (1) output measured in physical units and (2) data on inputs to the
production process, from which output is inferred. Data on physical products, such as
tons of steel or barrels of oil, are obtained from private trade associations as well as
from government agencies including those listed above; data of this type are used to
estimate monthly IP where possible and appropriate. When suitable data on physical
product are unavailable, estimates of output are based on either production-worker
hours or electric power use by industry. Data on hours worked by production workers
are collected in the monthly establishment survey conducted by the Bureau of Labor
Statistics. The data on electric power use are described below. The factors used to
convert inputs into estimates of production are based on historical relationships
between the inputs and the comprehensive data used to benchmark the IP indexes;
these factors also may be influenced by technological or cyclical developments.
Especially for the first and second estimates for a given month, the available source
data are limited and subject to revision.
Weights. In the index, series that measure the output of an individual industry are
weighted according to their proportion in the total value-added output of all
industries. The industrial production index, which extends back to 1919, is built in
chronological segments that are linked together to form a continuous index
expressed as a percentage of output in a comparison base year (currently 1987). Each
segment, which usually spans five years, is a Laspeyres quantity index showing
changes in quantities with prices (Census value added per unit of output) held at
base-year values for the segment. For the period from 1987 to the present, IP is
aggregated on the basis of 1987 value-added weights. The aggregation of the index
for the 1982-86 period is based on 1982 weights, whereas 1977 weights are used for
the 1977-81 period. The other weight years in the postwar period are 1972, 1967,
1963, 1958, 1954, and 1947. The 1987 value-added weights used to aggregate the
index are shown in the first column of tables 1,2, and 6, in the "1987" column under
the heading "Proportion in total IP." To the extent that a given industry grows faster
(slower) than the total index after 1987, its current proportion will rise (fall).
Proportions for the most recent complete year of data are shown in the second column
of tables 1,2, and 6.
Seasonal adjustment. Individual series are seasonally adjusted by the X-l 1ARIMA
method, developed at Statistics Canada. For series based on production-worker
hours, the current seasonal factors were estimated with data through October 1993;
for other series, the factors were estimated with data through July 1993. In some
cases, series were preadjusted for the effects of holidays or the business cycle before
using X - l l ARIMA. The seasonally adjusted total index is calculated by



10

aggregating the seasonally adjusted major market groups, and may not precisely
equal an aggregation of the seasonally adjusted industry groups.
Reliability. The average revision to the level of the total IP index, without regard to
sign, between the preliminary estimate and its third revision (or from the first and the
fourth estimates) was 0.35 percent during the 1972-92 period. The average revision
to the percent change in total IP, without regard to sign, from the first to the fourth
estimates was 0.26 percentage point during the same period. In most cases (about 85
percent), the direction of change in output indicated by the first estimate for a given
month is the same as that shown by the fourth estimate.
Rounding. In some cases, components may not add to totals because of independent
rounding. In addition, the published percent changes are calculated from unrounded
indexes, and may not be the same as percent changes calculated from the rounded
indexes shown in the release.
References. Industrial Production—1986 Edition contains a more detailed
description of the methods used to compile the index, plus a history of its
development, a glossary of terms, and a bibliography. To obtain Industrial
Production—1986 Edition ($9.00 per copy), write to Board of Governors of the
Federal Reserve System, Publications Services, Washington, DC 20551. The 1990
and 1993 revisions were described in the Federal Reserve Bulletin, vol. 76 (April
1990), pp. 187-204 and vol. 79 (June 1993), pp. 590-605, respectively.

Capacity Utilization
Definition. Capacity utilization is calculated for the manufacturing, mining, and
electric and gas utilities industries. For a given industry, the utilization rate is equal to
an output index divided by a capacity index. Output is measured by seasonally
adjusted indexes of industrial production. The capacity indexes attempt to capture
the concept of sustainable practical capacity, which is defined as the greatest level of
output that a plant can maintain within the framework of a realistic work schedule,
taking account of normal downtime, and assuming sufficient availability of inputs to
operate the machinery and equipment in place. The 75 individual capacity indexes
are based on a variety of data, including capacity data measured in physical units
compiled by trade associations, surveys of utilization rates and investment, and
estimates of growth of the capital stock.
Groups. Estimates of capacity and utilization are available for a variety of groups,
including primary and advanced processing industries within manufacturing,
durable and nondurable manufacturing, total manufacturing, mining, utilities, and
total industry. Component industries of the primary and advanced processing groups
within manufacturing are listed in the note on tables 2 and 3 of the release.
Weights. Value-added proportions are used to weight the individual capacity
indexes in aggregations in the same manner as individual IP series are aggregated to
the total index of industrial production. Although each utilization rate is the result of
dividing an IP series by a corresponding capacity index, aggregate utilization rates
are equivalent to combinations of individual utilization rates aggregated with
proportions that reflect current capacity levels of output valued in base-period
value-added per unit of actual output. The implied proportions of individual industry
operating rates in the rate for total industry for the most recent year are shown in the
first column of table 3.
Perspective. The historical highs and lows in capacity utilization shown in the tables
above are specific to each series and did not all occur in the same month. Industrial
plants usually operate at capacity utilization rates that are well below 100 percent:
none of the broad aggregates has ever reached 100 percent. For total industry and
total manufacturing, utilization rates as high as 90 percent have been exceeded only
in wartime.
References. The basic methodology used to estimate capacity and utilization is
discussed in the Federal Reserve Bulletin, vol. 71 (October 1985), pp. 754-66. The
1990 and 1993 revisions were described in the Federal Reserve Bulletin, vol. 76
(June 1990), pp. 412-35 and vol. 79 (June 1993), pp. 590-605, respectively.
ElectricPower
Data on electric power (expressed in kilowatt hours) are collected by the Federal
Reserve District Banks from electric utilities and also from manufacturing and
mining establishments that generate electric power for their own use (cogenerators).
The indexes of power use shown in table 9 are sums of kilowatt hours used by an
industry or industry group expressed as a percentage of that industry's or group's
usage in 1987. The first column of the table shows, for reference, electric power use
in billions of kilowatt hours as reported by manufacturing and mining industries in
the 1987 censuses of those industries. The supplementary group, "Total, less nuclear
nondefense," is shown separately because the nondefense nuclear material series
(part of SIC 2819) accounts for a disproportionately large part of total electric power
use. Because the value-added proportion for this industry in total IP is considerably
smaller than its share of total electric power use, excluding this component from total
power use facilitates comparisons with total IP.
Release Schedule for 1994
At 9:15 a.m. on January 14, February 15, March 15, April 15, May 16, June 15, July
15, August 15, September 16, October 14, November 15, and December 14.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102