Industrial Production and Capacity Utilization: The 2004 Annual Revision

On December 22, 2004, the Board of Governors of the Federal Reserve issued revisions to its index of industrial production (IP) and the related measures of capacity and capacity utilization for the period from January 1972 to November 2004. Overall, the changes to total industrial production were

Measured from the fourth quarter of 2002 to the third quarter of 2004, industrial output is reported to have increased a little less than shown previously. Production expanded more slowly in 2000 than earlier estimates indicated, whereas the contraction in 2001 was a little less steep. The rise in output in 2002 was slightly stronger than reported earlier.

Although the level of IP was a bit lower in the third quarter of 2004 than previously reported, the rate of industrial capacity utilization-the ratio of production to capacity-was revised upward. At 78.2 percent, the utilization rate for total industry was 0.9 percentage point higher than previously reported but still 2.9 percentage points below its 1972-2003 average. The current figures place the operating rate in manufacturing for the fourth quarter of 2003 and the third quarter of 2004 about percentage point above their earlier estimates. Excluding selected high-technology industries, capacity utilization in manufacturing in 2003 and 2004 was little revised on balance (chart 2). Capacity utilization rates at mines and utilities for the third quarter of 2004 were about 2 percentage points higher than reported earlier.