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FEDERAL RESERVE statistical release G.3 (402) For Immediate release October 19, 1987 CAPACITY UTILIZATION Manufacturing, Mining, Utilities, and Industrial Materials The estimates of capacity and capacity utilization have been revised. The revised data for 1987 are in this release; revised data for 1981-1986 as well as unrevised historical data are contained in the attached supplement. I Capacity utilization in manufacturing, mining, and utilities remained at 81.2 percent in September, as increased utilization at mines was offset by slight declines in operating rates at manufacturers and utilities. Taking a longer view, operating rates have been trending upward during the past year, almost fully reversing the two year decline that started in the third quarter of 1984. The increase in utilization over the past year has resulted from broad-based production increases in most industries, except automotive goods. Within manufacturing, most industries showed only small changes during September. The largest absolute changes were in primary metals and motor vehicles and parts. The operating rate for primary metals producers continued its upward trend of the past year. It has risen 15.5 percentage points during that period as production has increased and some steel mill capacity has been shut down. Utilization in the motor vehicles and parts industry fell again in September; automobile production rebounded slightly, but this was more than offset by a large decline in truck production. Producers of industrial materials continued to utilize 80.8 percent of their capacity in September. Gains in operating rates in nondurable goods materials industries were countered by declines for durable materials producers. The capacity and capacity utilization estimates have been revised beginning in 1981, while the related production indexes have been revised back to 1985. In the aggregate, neither production nor capacity growth between the end of 1984 and June 1987 have been revised significantly. However, there have been significant revisions to utilization rates in many of the individual industries. Capacity Utilization: S u m m a r y Percent of capacity, seasonally adjusted Series Total Industry 1973 Higli 1975 Low 1978 -80 1982 Low 1967 -86 Avq. JUN 1987 I JUi. I AOG I S£P 68.6 72.1 84.9 69.5 81.5 80.3 81.1 81.2 81.2 Manufacturing Durable Nondurable 87,7 87.4 88.3 69.9 67.9 71.8 86.5 86.3 87.0 68.0 63.7 74.2 80.6 78.7 83.5 80.8 77.8 85.2 81.5 78.5 85.8 81.6 78.8 85.7 81.5 78.8 85.5 Mining Utilities 92.8 95.6 87.8 82.9 95.2 88.5 76.9 78.0 87.2 87.3 76.6 79.0 76.8 80.0 77.4 79.0 78.2 78.8 92.0 70.5 89.1 68.5 82.3 79.8 80.4 80.8 80.8 Industrial Materials CAPACITY UTILIZATION SEPTEMBER DATA SEASONALLY ADJUSTED. PERCENT 110 TOTAL INDUSTRY TOTAL MATERIALS 90 70 50 110 MINING UTILITIES 90 // \/~A V/ MANUFACTURING \ V / I 70 50 110 MANUFACTURING ELECTRICAL MACHINERY 90 NONDURABLE 70 V/ MOTOR VEHICLES AND PARTS 30 1972 1975 1978 1981 1984 1987 1972 1975 1978 1981 1984 1987 MANUFACTURING, MINING AND UTILITIES Table 1 Capacity Utilization Monthly, seasonally adjusted, percent of capacity 1973 1 1975 1 1978 1 1982 | 1967 1 1986 1 Series «ig* 1 LOM k - 8 0 1 Low 1 -86 | SEP 1 i 1 fli<lh 1 Total Industry Manufacturing Primary processing Advanced processing Durable manufacturing Stone, clay and glass products Primary metals Iron and steel, subtotal Nonferrous metals, subtotal Fabricated metal products Nonelectrical machinery Electrical machinery Motor vehicles and parts Automobiles Aerospace and misc. trans, eqp. Instruments Other durables Nondurable manufacturing Food and kindred products Textile mill products Paper and products Chemicals and products Petroleum products Rubber and plastics products Other nondurables i A 1 1 88.61 72.11 86.91 69.511 1 1 87.7|1 69.91 86.51 68.01 • 1 1 91.9| 68.31 89.11 65.01 86.01 71.111 85.11 69.51 87.41 67.91 86.31 63.711 89.3| 67.11 86.61 62.91 101.91 67.0| 97.11 45.81 105.81 66.61 100.31 37.61 95.61 62.11 91.1| 60.81 85.01 64.71 87.41 61.31 89.0) 68.21 86.0| 62.9| 85.71 63.7| 89.91 66.91 97. 11 52.7| 93.31 47.01 91.8| 43.7| 93.31 36.61 77.01 69.61 87.11 70.71 89.21 74.9| 88.91 77.81 87.71 69.01 81.0| 69.11 • 88.81 71.31 87.0J 74.21 85.81 77.61 85.11 76.51 92.11 58.91 88.31 70.61 95.61 67.71 92.71 80.21 88.61 69.2| 82.91 67.61 99.61 83.71 91.71 68.81 97.51 59.51 89.41 71.21 86.41 72.31 92.4| 78.S1 1 81.51 1 80.61 • 81.61 80.11 1 78.71 78.11 79.6| 78.61 81.21 77.71 78.21 78.2J 78.QI 76.71 77.11 83.21 81.6| 19 a7 JAI 1 FSB 1 BAB 1 AP& 1 HI! | J0« 1 JDX 1 A0G | SEP 79.2 79.7 79.7 79.6 79.9 80.3 81.1 81.2 81.2 79.6 80.0 80.3 60.2 80.4 80.8 81.5 81.6 81.5 82.7 78.2 82.4 79.0 83.1 79.1 83.5 78.7 83.2 79.2 84.0 79.2 85.2 79.8 85.2 80.0 85.2 79.8 76.91 82.51 68.71 62.11 78.5| 77.21 72.31 73.71 81.11 77.81 89.41 78.3| 81.21 76.9 84.8 69.8 63.1 79.5 77.1 70.9 75.0 80. 0 72.3 89.5 77.9 83.0 74.2 70.1 80.2 78.3 73.0 74.0 83.0 78.8 90.0 77.7 81.9 77.5 83.3 73.6 69.9 78.7 77.* 73.8 73.9 78.1 74.3 89.2 78.8 81.0 77.6 80.8 74.5 71.0 79.5 76.7 73.3 75.0 79.6 71.6 89.5 78.2 81.7 77.8 81.1 76.4 74.2 79.5 78.4 74.2 74.7 76.2 67.4 88.9 79.3 81.9 78.5 81.6 77.7 81.2 77. 6 82.5 72.2 66.4 80.7 76.9 71.8 75.2 83.9 80.8 90.0 78.9 81.4 77.5 66.5 88.7 78.8 82. Q 78.8 80.5 82.6 82.7 82.6 78.0 75.4 76.2 77.2 59.0 89.3 79.7 81.6 78.8 80.4 84.2 85.0 83.0 78.1 75.6 76.1 75.2 60.7 89.5 80.0 81.2 82.31 84.71 88.21 78.71 87.01 84.7| 85.91 83.11 79.81 88.81 91.5| 79.5| 85.31 84.71 84.81 83.7 79.2 87.3 92.7 81.4 67.2 84.9 85.6 83.6 80.1 88.5 92.6 80.9 83.5 85.0 85.2 83.9 80.4 89.8 92.3 80.5 83.8 85.9 85.7 84.2 79.4 92.9 92.5 81.5 85.5 86.5 85.8 84.6 80.1 92.1 92.7 81.9 84.1 87.0 86.9 85.2 80.1 93.1 93.3 82.4 83.7 88.4 87.5 85.8 80.4 94.9 94.8 83.4 84.1 89.2 87.7 85.7 80.9 92.2 95.2 83.9 83.6 88.8 86.8 85.5 80.2 92.4 95.2 84.1 83.7 88.9 86.5 83.5| 78.81 1 7 9 . 44 1 81.5| 78.41 1 79.2 77.4 81.5 78.3 75.3 75.5 Mining 92.81 87.8| 95.21 76.9| 87.21 73.11 76.1 75.8 75.5 75.9 76.5 76.6 76.8 77.4 78.2 Utilities Electric utilities 95.61 98.71 I 82.91 83.0| 88.51 87.61 78.01 87.31 78.21 88.31 A 77.51 80.91 78.5 80.8 78.8 81.1 78.2 81.8 76.8 80.7 79.2 84.8 79.0 84.6 80.0 85.9 79.0 84.4, 78.8 83.8 1 Table 2 Output, Capacity, and Capacity Utilization Quarterly, seasonally adjusted 1 1987 1 02 Q4 gi 03 1 4 1 124.8 125.91126.9 128.2 130. $4 » 1 129.2 130.41131.6 133.2 135.911 (JUT PUT Series Total Industry Manufacturing Primary processing Advanced processing Durable manufacturing Stone, clay and glass products Iron and steel subtotal Nonferrous metals, subtotal Fabricated metal products Nonelectrical machinery Electrical machinery Motor vehicles and parts Automobiles Aerospace and misc. trans, eqp. Instruments Other durables Nondurable manufacturing Food and kindred products Textile mill products Paper and products Chemicals and products Petroleum products Rubber and plastics products Other nondurables Mining 1986 Q3 96.8 157.9 158.71159.5 1 162.4 163.41164.$ DTIJ J 1986 03 160.4 161.34 79.0 03 166.71 I 139.81 182.91 1 170.24 83.5 79.0 85.2 79.9 77.5 83.4 72.1 66.5 80.1 77.5 71.$ 74.7 82.3 77.3 89.9 78.1 81.5 77.6 81.7 74.8 71.7 79.2 77.6 73.8 74.$ 78.0 69.7 89.2 78.8 81.5 78.7 80.6 82.9 81.7 82.4 78.1 75.4 76.0 76.6 62.0 89.2 79.5 81.6 83.7 79.9 88.$ 92.5 80.$ 84.8 85.2 85.$ 84.7 79.9 92.7 92.8 81.9 84.4 87.3 86.7 85.7 80.5 93.1 95.1 83.8 83.8 89.0 87.0 76.3 77.5 78.3 83.4 79.3 84.7 96.91 98.8 99.0 100.94 131.2 130.84130.4 129.7 129.0| 73.# 1 1 137.31137.7 138.3 138.81 78.3 150.9*1150.8 151.9 152.94 82.3 1 107.3 109.11108.1 108.3 110.11 122.9 123.74122.5 126.6 129. 51 137.0 149.3 i 1 • 81.2 81.5 80.9 157.6|158.9 169.11170.3 124.81125.2 149.91151.1 166.94167.8 109.41109.8 181.51183.8 155.51157.5 160.3 1 171.6 4 125.7 1 152.4 1 168.7 110.1 110.51 1 186.3 159.6 161.81 03 79.9 82.7 78.7 156.4 168.9 124.4 148.7 166.0 108.9 179.2. 153.7 j 02 81.4 78.6 1 137.0 1 116.5 141.5 146.01 1 138.2 93.0 92.61 1 162.7 138.4 140.81 135.21136.1 111.91110.$ 139.81139.$ 133.81135.8 92.84 93.1 155.54156.7 133.51134.6 01 1 79.44 79.$ 89.5 1 102.31 111.21 154. 91 173.81 108.31 92.21 153.51 145.71 133.81 138.511 04 1 166.8 143.9 106.$ 97.7 123.0 139.3 199.9 225.5 139.2 144.9 168.0 176.6 157.2 146. 14 1 134.01 1 84. 11 01 1987 79.5 165.6 1 137.54138.2 139.9 179.11180.3 181.6 1 167.61168.4 169.3 1 143.31 144.0 145.1 105.1|104.9 103.3 102.64 4 95-61 93.8 92.5 1 123.91123.2 123.7 140.01140.8 141.5 142.34 205.44 201.41202.8 204.1 226.51227.4 228.1 228.94 139.71140.2 140.7 141.24 146.-11 147.1 147.8 148.61 169.91170.0 171.1 172.11 178.31180.0 181.6 183.34 158.7H60.3 162.2 164.91 Note. Data for output are percentages of 1977 output as shown in the Federal Reserve's season* ally adjusted indexes of industrial production. Capacity is also expressed as a percentage of 4 1 136.9 177.8 1 Utilities Electric utilities 04 CAPACI^i 1987 02 01 119.H 1 111.$ 113.44114.3 116.1 139.9 140.61142.0 143.5 128.2 129.11130.5 131.4 117.$ 118.51120.2 118.6 73.9 74.94 75.9 77.3 61.9 61.94 62-4 66.3 95.6 96.74 98.7 98.9 107.1 108.$4109.1 109.9 145.1 144.81145.8 150.6 166.5 168.51169.9 170.9 111.4 109.71115.4 109.7 108.1 109.64113.7 103.1 149.8 150.81152.8 152.6 139.9 139.51140.6 143.1 127.8 131.21130.7 132.2 1 135.7 130.7 132.11133.1 134.7 110.0 138.9 132.5 92.8 152.9 131.3 1986 03 79.84 1 82.51 78.5J I 76.8 77.01 82.2 82.71 68.6 7Q.4I 62.5 64.81 77. J 78.61 76.9 77.81 72.6 71.91 73.8 74.41 80.0 78.5| 74.6 75.04 89.2 89.24 78.7 78.24 81.3 82.74 1 83. t> 83.81 80.2 88.4 92.8 79.8 85.3 65.3 85.5 80.01 89.71 93.3| 80.21 84.94 85.71 85.91 1 74.11 75.8 1 79.41 78.5 82.51 81.2 1977 actual output. Capacity utilization percentages are calculated as ratios of production to capacity. INDUSTRIAL MATERIALS Table 3 Capacity Utilization Monthly, seasonally adjusted, percent of j JUJ1 J J 0 1 j 1 0 G J SEP I Industrial Materials 92.0| * 1 I Durable goods materials 91.81 I Metal materials 99.21 1 Raw steel 106.01 Aluminum 95. 71 I 1 Nondurable goods materials 91.11 I 92.81 Textile, paper, and chemical materials I Pulp and paper materials 98. 4 J Chemical materials 92.51 I I Energy materials 94. 61 J 70.51 | 1 64.4J 67.11 66.4| 73.0| 1 66.71 1 64.81 70.6J 64.4| I 86.9| 89.11 I I 89.8| I 93.61 I 98.91 97.41 I 1 88.1| I 89.41 1 97.3| 87.91 1 1 94.01 1 I 68.51 1 I 60.9| I 45.7| I 36.11 58.81 1 1 70.7| I 68.8| I 79.91 63.51 I I 82.3| 77.7| I 78.7 78.7 78.7 79.1 79.3 79.8 80.4 79.11 73«7| 74.4 74.7 }5.2 75.0. 75.1 75.9 76.$ 77.0 76.3 77.81 1 80.3| 87.4| I I 83.2| I 83.61 1 91.41 80.8| 1 1 89.3| 65.11 I 59.6) 68.91 I 66.2 67.8 68.7 68.8 69.7 71.5 73.9 76.6 77.4 64.2 78.1 63.3 67.8 78.1 79.4 70.6 73.4 80.8 80.3 76.7 84.7 79.5 36.5 86.8 88.6 82.3| I 84.0| I 85.0| 94.71 81.2| I I 80.6| I 80.8 80.8 85.1 84.6 84.8 86,5 86.2 86.1 87.7 87.4 87.8 86.4 85.4 85.8 87.5 87.1 87.1 89.2 88.9 89.4 96.4 83.4 95.6 82.3 94.6 95.1 95.7 82.2 83.9 83.9 96.3 99.6 99.9 83.1 84.2 84.5 82.5 81.9 80.9 81.3 82.1 82.8 82.3 32.8 82,8 Table 4 Output, Capacity, and Capacity Utilization Quarterly, seasonally adjusted Series Industrial Materials Durable goods materials Metal materials Raw steel Aluminum Nondurable goods materials Textile, paper and chemical materials Pulp and paper materials Chemical materials Energy materials 1 1 Q3 1 Q4 1 113.0 114.31115.0 116.5 110.71 1 1 1 125.81 120.71121.4 122.9 119.0 1 j 73.2 75.41 74.7 77.0 83.11 1986 Q3 O0TPDT 1987 Q1 • 1 58.61 60.9 67.9 1 70.91 74.9 77.8 1 1 1 1 1 118.3 120.31121.2 124.0 126.91 * 118.9 120.91122.3 125.1 128.71 1 i• 134.1 137.01136.4 137.7 118.1 120.31122.9 125.3 1 4 1 1 1 98.1 97.84 98.3 98.7 99.21 4 60.3 68.3 1986 Q3 Q4 CAFACXTX 1987 Q2 Q1 1 Q3 1 1 1 145.1 145.61146.1 146.7 1 147.24 1 1 16U6| 162.3 163.91 163.1 161.0 I 1 112.5 111.51110.6 110.0 109.41 i Q3 77.9 78.51 7a. 7 1 79.4 80.7 73.9 74.71 I 67.71 1 61.51 72.7| 1 1 84.71 I 85.41 | 96.71 81.41 1 1 74.9 75.4 76.8 76.0 65.Q 62.0 67.7 83.6 i 140.9 141.61M2.4 I 140.7 141.7| U2.S 147.0 147.8|148.8 1 1 120.5 120.41120.3 I 1987 Q1 Q4 i i 97.3 95.31 93.6 92.2 1 100.9 97.4| 95.4 94.9 1 1 1 1 141.4 142.11142.9 143.9 144.74 UT£JbJ.SAX.1. 1986 143.4 144.41 I 143.9 1 149.9 1 1 84.4 120.2 120.14 1 81.5 95.3 80.3 67.5 7<*.O 65.1 78.$ 13.6 84.9 H*.2 87.7 35.9 81.Z 89.2 95.5 82.6 95.7 «1.7 « . , 82.7 1 Explanatory Notes Definition. This release contains estimates of output, capacity, and capacity utilization for the nation's factories, mines, and electric and gas utilities. Output data are the Federal Reserve's seasonally adjusted indexes of industrial production, which express output as percentages of 1977 output. The capacity estimates are expressed as percentages of 1977 output as well. Capacity utilization percentages are calculated as ratios of production to capacity. The capacity indexes are based on a variety of data, including capacity data in physical units compiled by trade associations, private and government surveys of capacity growth and utilization rates, and estimates of capital stock growth. The concept of practical capacity is applied, which is defined as the greatest level of output that a plant can maintain within the framework of a realistic work pattern, taking account of normal downtime, and assuming sufficient availability of inputs to operate machinery and equipment in place. When the capacity indexes for individual industries are aggregated—for example to total manufacturing—no explicit account is taken of possible general equilibrium constraints such as emerging industry bottlenecks. Because of the large and heterogeneous database, changes in utilization rates may be more meaningful in the analysis of business conditions than any particular level of these rates. Groupings. Estimates of capacity and industrial production for manufacturing industries are aggregated to primary processing and advanced processing industries, to durable and nondurable manufacturing industries, and to total manufacturing. The mining, manufacturing, and utifities estimates aggregate to the total index. Primary processing includes textile mill products, paper and products, industrial chemicals, petroleum products, rubber and plastics products, lumber and products, primary metals, fabricated metal products, and stone, clay, and glass products. Advanced processing includes foods, tobacco products, apparel products, printing and publishing, chemical products such as drugs and toiletries, leather and products, furniture and fixtures, machinery, transportation equipment, instruments, miscellaneous manufactures, and government-owned-and-operated ordnance facilities. Industrial materials are items produced and .used as inputs by manufacturing plants, mines, and utilities. Industrial materials include many of the items included in the primary processing grouping of manufacturing, as well as some of the output of the advanced processing industries, mines, and utilities—such as iron ore, crude oil, semiconductors, and electricity sold to industry. 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 mining, manufacturing, and utilities as a whole, and for toftl manufacturing, utilization rates as high as 90 percent have been exceeded only in wartime. Revisions. The first estimates for a month are published about the 17th of the following month. These estimates may revise in each of the next three months as new data become available. After the fourth month no further revisions are undertaken until an annual or benchmark reHsion. The median of the revisions in the total manufacturing utilization rate between the first and fourth estimate is 0.3 of a percentage point; that is, in about half of the cases, the absolute value of the revision from the first to the fourth estimate is less than 0.3 of a percentage point. Sources. The basic methodology used to estimate the series is discussed in Richard D. Raddock, "Revised Federal Reserve Rates of Capacity Utilization," Federal Reserve Bulletin, Vol. 71 (October 1985), pp. 754-66. Revised data for 1984-85 as well as historical utilization rates since 1967 (1948 in the case of manufacturing) are included in the statistical supplement to the September 1986 capacity utilization release. Copies may be obtained from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551 Rounding. Utilization rates are calculated from unrounded capacity and production indexes. Aggregates are derived from unrounded detailed components. Release schedule for 1987. Approximately 11 a.m. on January 20, February 17, March 16, April 16, May 18, June 17, July 16, August 17, September 16, October 19, November 16, and December 16.