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Industrial production index

The Federal Reserve’s monthly measure of real output in manufacturing, mining and utilities. It is territorial, ownership-blind, and expressed against a base year rather than as a level.

Definition

The industrial production index is the Federal Reserve’s monthly measure of real output for manufacturing, mining, and electric and gas utilities. The Federal Reserve publishes it in the G.17 release and computes it as a Fisher index weighted by annual estimates of value added.

Measurement noteThe index is rebased periodically and currently uses 2017 as its base year, set at 100. A reading describes output relative to the 2017 average and is not a level. Comparisons across rebasings require the underlying series rather than the headline number, which is a frequent source of error in published commentary.

What it counts

The Federal Reserve states that the index measures the real output of all relevant establishments located in the United States, regardless of their ownership, and excludes those located in U.S. territories. A plant in Kentucky owned by a foreign company counts fully. A plant in Mexico owned by an American company does not count at all.

Why it matters for capacity

The index is the standard evidence for claims that manufacturing output rose while employment fell. Whether that claim holds depends entirely on the period chosen, because the index has moved very differently across decades, and an argument citing it should state which decades it means.

Related terms

Capacity utilization · Value added · Employment share

Appears in

Is American Manufacturing Actually Declining?
When Did American Deindustrialization Begin?

Read next

Is American Manufacturing Actually Declining?

Sources

• Board of Governors of the Federal Reserve System, Industrial Production: Manufacturing, series IPMAN. fred.stlouisfed.org
• Board of Governors of the Federal Reserve System, G.17 Industrial Production and Capacity Utilization. federalreserve.gov