Wednesday, September 15, 2010

The SBA and the Fed- capacity utilization

Production in the U.S. cooled in August as automakers scaled back following a surge in output the prior month.

Industrial production increased 0.2 percent last month after rising 0.6 percent in July, figures from the Federal Reserve showed today. Manufacturing expanded 0.5 percent excluding autos, the most since May.

Capacity utilization, which measures the amount of a plant that is in use, increased to 74.7 percent last month. It was 74.6 percent in July. The gauge averaged 80 percent over the past 20 years, showing there’s enough spare plant equipment and space to prevent bottlenecks that would lead to higher prices.

For a copy of the complete release, go here- Industrial production and Capacity Utilization

What does this mean?

This is the highest level for industrial production since Oct 2008, but production is still 7.2% below the pre-recession levels at the end of 2007. Capacity utilization at 74.7% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007. The all-time low was 69.9% back in August of 2009. This was the lowest ever.

We aren't even half way out of the hole yet.

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