📊 Summary of the Industrial Production and Capacity Utilization Report
The Industrial Production and Capacity Utilization report, published by the Federal Reserve, is a key indicator of the health and trends within the U.S. industrial sector. It covers manufacturing, mining, and utilities, providing insights into real output, productive capacity, and how intensively resources are being used. Here’s a detailed summary of the latest findings and their economic significance.
Overview of the Report
The report measures two main things:
- Industrial Production (IP): Tracks the real output of factories, mines, and utilities.
- Capacity Utilization: Shows the percentage of total production capacity that is actually being used.
The data is broken down by industry (like manufacturing, mining, and utilities) and by market group (such as consumer goods, business equipment, and materials). The reference period for the index is 2017, and the latest report includes data up to November 2025.
Key Findings from the Latest Release
- Recent Trends in Industrial Production
- 📈 Overall IP rose by 0.2% in November 2025 after a slight dip of 0.1% in October.
- 📉 On average, IP increased by 0.1% per month from October to November.
- 🏭 Manufacturing output was 1.9% higher than a year earlier in November.
- ⛏️ Mining output fell 0.8% in October but rebounded by 1.7% in November.
- ⚡ Utilities output increased 2.6% in October but decreased 0.4% in November.
- Capacity Utilization Rates
- 🏭 Total industry capacity utilization stood at 76.0% in November 2025.
- 🏭 Manufacturing utilization was 75.4%, unchanged from October and 2.8 percentage points below its long-run average (1972–2024 average is 78.2%).
- ⛏️ Mining utilization rose to 86.3%, which is 1.1 percentage points above its long-run average.
- ⚡ Utilities utilization was 70.9%, remaining well below its historical average.
- Historical Context
- 📉 Industrial plants rarely operate near full capacity. The long-term average utilization rate for all industries is 79.5%, and for manufacturing, it’s 78.2%.
- 🕰️ Utilization rates above 90% have only occurred during wartime. None of the broad aggregates have ever reached 100%.
- Revisions and Methodology
- 🔄 The report incorporates annual revisions, with the latest update including new data from the 2022 Economic Census and updated industry classifications (2022 NAICS codes).
- 📊 Capacity estimates are based on a mix of physical data and survey responses, primarily from the U.S. Census Bureau’s Quarterly Survey of Plant Capacity Utilization.
- Market and Industry Group Performance
- 🛒 Consumer goods production rose 0.3% in November.
- 🏗️ Business equipment output increased by 0.3%.
- 🏢 Nonindustrial supplies and construction showed mixed results, with construction output down 0.6% in November.
- 🏭 Durable manufacturing utilization was 73.4%, while nondurable manufacturing was higher.
Economic Significance and Interpretation
- ✅ Moderate growth in industrial production suggests steady, but not robust, expansion in the industrial sector.
- ⚠️ Capacity utilization rates below long-term averages indicate there is still slack in the system—factories and plants are not running at full tilt, which can signal subdued demand or cautious business investment.
- 📉 Utilities’ low utilization may reflect mild weather, energy efficiency gains, or shifts in industrial energy use.
- 📈 Mining’s strong utilization points to higher demand or constrained supply in that sector.
💡 Summary
The Industrial Production and Capacity Utilization report shows that U.S. industrial output is growing modestly, with November 2025 seeing a 0.2% increase in production. However, capacity utilization rates remain below historical averages, especially in manufacturing and utilities, suggesting that the sector is not operating at full strength. This indicates ongoing slack in the economy, with room for further growth if demand picks up. The report’s detailed breakdown by industry and market group helps economists and policymakers assess where strengths and weaknesses lie within the industrial sector.
References:
Industrial Production and Capacity Utilization, Federal Reserve