Economy

Gains Made in Industrial Production and Capacity Utilization in April

Jon C. Ogg

Published: May 17, 2016 11:50 am

Last Updated: January 13, 2020 7:56 am

Industrial production rose in the month of April, but economist and investors may take issue that weather-related factors rather than higher consumer spending and business spending may have been the reason. The numbers looked good on the surface, but this still suggests that overall economic growth remains subdued.

Industrial production rose 0.7% in the month of April, according to the Federal Reserve. Even if this was due to weather and other factors, this reading still marked the largest jump for a single month going back to November 2014.

Another observation was that utilities were the largest part of the increase. They boosted their output due to higher demand for electricity and natural gas.

As far as the weather-related issues, the Federal Reserve said that this was a return to normal weather in April after an unusually warm March.

Total factory output, the largest portion of production, rose by 0.3% in April. That reading was down in the red by 0.3% in March. Machinery and car demand lead that gain.

Despite the rise in many metal and energy prices, overall mining output was down 2.3% in April. This was due to ongoing issues and energy and coal.

Capacity utilization in the industrial sector managed to rise a half a point to 75.4%. This still remains grossly under the 80% mark that is needed to maintain the historical average.

Additional data was seen as follows:

• Among consumer goods, the output of durables rose 1.3%, and the production of non-energy nondurables moved up 0.3%.
• The increase for non-energy nondurables reflected gains for foods and tobacco and for chemical products that were partly offset by decreases for clothing and paper.
• The production of business equipment advanced 0.8%, mostly because of a sizable increase for industrial and other equipment.
• The indexes for defense and space equipment, construction supplies and non-energy business supplies were little changed.
• The output of non-energy materials moved up 0.1% as a result of an increase in its durable component, but the production of nondurable materials edged down.