Industrial production (IP) indices measure the current output of the specified manufacturing, energy, or mining industry as a ratio to the output of the base year (which is set to be equal to 100).
The total index is most heavily influenced by manufacturing, reflecting the large share of manufacturing in the economy. In 1999, the latest year which data is available, manufacturing accounted for 88.8 percent of the total value added of the three industries, with 4.8 percent for mining, and 6.4 percent for utilities. Over the last 10 years, manufacturings output grew twice the rate of utilities, while minings output stayed around its base year level.
Changes in the output levels of manufacturing, mining, and the utility industries have direct impact on the demand for transportation, because their outputs have higher weight/value ratios than those of other sectors in the economy and hence it needs more transportation service to produce a unit of output in these three industries. According to the U.S. Transportation Satellite Accounts published by the Bureau of Transportation Statistics, it requires 3.5 cents of transportation service as input to produce a $1 worth of output in the manufacturing industry, 4.3 cents in the mining industry, and 2 cents in the utility industry.
In terms of modal distribution, more than three fifths of manufacturing industrys transportation demand are for trucking service, while the mining industry and the utility industry rely more on railroad service.
|Industrial Production Index (Jan-92=100)||Sep-02||Oct-02|
|Manufacturing percent change from previous month||-0.40||-0.73|
|Total index percent change from previous month||-0.21||-0.81|
|Utilities percent change from previous month||2.41||-1.55|
|Mining percent change from previous month||-0.60||-0.99|
NOTES: The three Major Industry Groups are manufacturing, utilities, and mining. Currently, industries are classified using the Standard Industrial Classification (SIC) groups, but will change to the North American Industrial System (NAICS) with the 2002 revision. There is more information at the Federal Reserve Board of New York's web site: http://www.federalreserve.gov/Releases/G17/sdtab1.pdf.
Data from July to October 2002 are preliminary.
The base period of the original index is the 1992 annual index. The month of January 1992 is set to be the new reference point (=100) by dividing the values of the original index by the value of January 1992 in the original index. It is important to point out that this process changes only the reference point, and not the base period of the index because the weight structure of the index did not change.
SOURCE: Federal Reserve, "Industrial Production and Capacity Utilization" Statistical Release; Nov. 15, 2002; available at: http://www.federalreserve.gov/releases/g17/download.htm.