Industrial Production & Capacity Utilization
The Industrial Production and Capacity Utilization report is assembled and released around the fifteenth of each month by the Board of Governors of the Federal Reserve System. It presents the data on the output of the nation’s manufacturing, mining, and utility sectors. Also known as the Federal Reserve’s G17 report, it organizes this data into industrial production and capacity utilization indices. The former measures the physical volume of the output of various industries and markets, the later shows what portion of the nation’s production capacity was involved in creating that output. The Industrial Production and Capacity Utilization release, along with the historical data, is available on the Federal Reserve’s website, www.federalreserve.gov
The Industrial Production and Capacity Utilization report is an assemblage of fifteen tables arranged over nineteen or twenty pages. They display the current month’s values for the various industrial-production and capacity-utilization indices, revisions to the previous months’ values, month to month percentage changes in the indices, and their quarterly and annual rates of growth.
The industrial production indices measure quantity of output, not dollar volume, relative to a base year, currently 1997, whose value is set at 100. The Federal Reserve obtains the production data it uses to construct these indices both directly and indirectly. Direct sources include trade associations such as the American Forest and Paper Association, the U.S. Geological Survey, the Internal Revenue Service, and the Tanner’s Council of America. Actual production data, however, is available at different times for different industries. When hard figures aren’t available the Federal Reserve estimates output based on the number of production-worker hours in the Bureau of Labor Statistics’ monthly Employment Situation report or on electric power use by industry.
Capacity utilization is a measure of how close the nation’s manufacturing sector is to running at full capacity. The Fed defines full capacity as sustainable practical capacity, or the greatest level of output that a plant can maintain within the framework of a realistic work schedule, taking into account normal downtime and assuming sufficient availability or inputs to operate the machinery and equipment in place.
The report contains capacity and capacity utilization rates for eighty-five industries, including the following major categories:
- semiconductors and related electronic components
- motor vehicles and parts
- apparel and leather
- wood products
- electric utilities