Industry capacity utilization rates measure the intensity of production given current available capital and indicate the potential for short-term expansion. Changes in industry capacity utilization rates describe the changes in the relation between supply and demand. Since capacity changes much slower, short-term changes in utilization reflect primarily changes in demand and the availability of labor. In a period of fast growth, capacity utilization would be high, while in a period of slowdown, it would be low. In the long-run, firms may adjust the amount of capital to respond capacity shortages or capacity under utilization.
|Industrial Capacity Utilization||Feb-02||Mar-02|
|Percent change from previous month||2.62||1.20|
|Percent change from previous month||-0.72||-1.57|
|Total index (percentage)||74.90||75.38|
|Percent change from previous month||0.25||0.64|
|Percent change from previous month||0.11||0.72|
NOTES: The three Major Industry Groups are manufacturing, utilities, and mining. There is more information at the Federal Reserve Board of New York's web site: http://www.federalreserve.gov/Releases/G17/sdtab1.pdf.
Mining includes components of two-digit (Standard Industrial Classification) SIC group 10-14. Utilities includes parts of SIC group 49. Manufacturing is also available broken down between durable and nondurable. Durable manufacturing includes measurements from SIC groups 24, 25, and 32-39; nondurable manufacturing includes measurements from SIC groups 20-23 and 26-31. The North American Industrial System (NAICS) will be used starting 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.
The Federal Reserve Board constructs estimates of capacity and capacity utilization for industries in manufacturing, mining, and energy. A capacity utilization rate is equal to a specified output index divided by the corresponding capacity index. The Federal Reserve Board's capacity indices are designed to quantify the concept of sustainable maximum output within a given industry. Sustainable maximum output is the highest level of output that a plant can maintain within the framework of a realistic work schedule, taking both into account normal downtime and assuming sufficient availability of inputs to operate the capital in place.
Data from December 2001 to March 2002 are preliminary.
SOURCE: Federal Reserve, "Industrial Production and Capacity Utilization" Statistical Release; Apr. 16, 2002; available at: http://www.federalreserve.gov/releases/g17/download.htm.