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||Jul-02||Aug-02|
|Percent change from previous month||2.15||-2.78|
|Percent change from previous month||-0.47||0.76|
|Total index (percentage)||76.23||75.97|
|Percent change from previous month||0.35||-0.34|
|Percent change from previous month||0.23||-0.21|
NOTES: The three Major Industry Groups are manufacturing, utilities, and mining. There is more information at the Federal Reserve Board'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'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 May to August 2002 are preliminary.
SOURCE: Federal Reserve, "Industrial Production and Capacity Utilization" Statistical Release; Sept. 17, 2002; available at: http://www.federalreserve.gov/releases/g17/download.htm.