The 2020 Mid-Year Economic Update_long

Industrial Production Up 0.4% in November

According to the Industrial Production and Capacity Utilization Report, manufacturing output increased 0.8% during the month; year-to-date industrial production has improved but is still 5% below its pre-pandemic level.
Industrial Production and Capacity Utilization November 2020

Total industrial production grew 0.4% in November, according to the Industrial Production and Capacity Utilization Report, released Tuesday by the Federal Reserve. The index has recovered much of its 16.5% decline from February to April, but output in November was still 5% lower than its pre-pandemic February level.

After edging up 1% in October, manufacturing output increased 0.8% in November for its seventh consecutive monthly gain. An increase of 5.3% for motor vehicles and parts contributed significantly to the gain in factory production; excluding motor vehicles and parts, manufacturing output moved up 0.4%. The output of utilities declined 4.3%, as warmer-than-usual temperatures reduced the demand for heating. Mining production increased 2.3% after decreasing 0.7% in October.

At 104.0% of its 2012 average, total industrial production was 5.5% lower in November than it was a year earlier. Capacity utilization for the industrial sector increased 0.3% in November to 73.3%, a rate that is 6.5% below its long-run (1972–2019) average but 9.1% above its low in April.

The major market groups posted mixed results in November. The step-down in the index for utilities contributed to declines in the indexes for consumer goods and for business supplies. The index for business equipment rose 2%, supported in part by a sizable increase in the production of motor vehicles as well as by continued recovery in the production of commercial aircraft. The output of materials rose 0.7%, with similarly sized gains for each of its three main components  — durable, nondurable and energy materials.

Manufacturing output increased 0.8% in November to a level that was 3.8% below its pre-pandemic reading. The index for durable manufacturing rose 1.5% with widespread gains across its components. In addition to the large increase for motor vehicles and parts, output moved up notably for primary metals, for computers and electronics, for aerospace and miscellaneous transportation equipment, and for miscellaneous manufacturing. The index for nondurables edged up 0.1% in November after posting an increase of 1.4% in October.

The index for utilities dropped 4.3% in November, with declines for both electric and natural gas utilities. Mining production rose 2.3%; all of its major components posted gains of more than 1-1/2%.

Capacity utilization for manufacturing moved up 0.6% in November to 72.6%, 12.5% higher than its trough in April but still 5.6% below its long-run average. The utilization rate for mining increased to 79.4%; it remained well below its long-run average of 87.2%. The operating rate for utilities declined to 70.2%, a rate that is 15% below its long-run average.

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