Capacity Utilization & Industrial Production
Capacity utilization increased to 81.3% in March vs prior 81% in Feb, the highest level since September 2000.
The report also showed that output rose 0.6% in March vs prior +0.5% in Feb, +3.6% YOY and +4.5% for Q106.
Output of business equipment +0.8% in March and +10.9% YOY. Output of consumer goods +0.5% and +1.9% YOY.
Excluding motor vehicles, manufacturing output +0.5%. Output of high-technology industries +2.7% and is now +23.2% YOY.
Semiconductor production +3.5%, communication equipment +2.2% and computers +0.4%. Excluding high-tech, manufacturing output +0.4%.
Capacity utilization rates are now 0.3 percentage points above long-term averages for total industry and 0.6 percentage points above the long-term average in manufacturing.
Inside the number: Deutsche Bank economist Joseph LaVorgna argued that there's strong empirical evidence that the correlation between capacity utilization and inflation has broken down.
"We conclude there may be room for capacity utilization to rise several percentage points further before significant upward pressure on inflation begins to emerge."
Despite parabollically rising commodities prices due to an orchestrated production squeeze, so far, there's little indication of any capacity restraints.
Private industry has not greatly expanded capacity to meet growing demand, even though it has plenty of cash on hand, cheap credit and increased margins to justify the expansion or development of alternative sources.
The capacity of the nation's industrial sector has grown only 1.8% in the last year, well below the 3.1% annual average in the 25 years before the 2001 recession.
Outside of high-tech, factory capacity has grown just 0.7% since the recession started five years ago.
The report also showed that output rose 0.6% in March vs prior +0.5% in Feb, +3.6% YOY and +4.5% for Q106.
Output of business equipment +0.8% in March and +10.9% YOY. Output of consumer goods +0.5% and +1.9% YOY.
Excluding motor vehicles, manufacturing output +0.5%. Output of high-technology industries +2.7% and is now +23.2% YOY.
Semiconductor production +3.5%, communication equipment +2.2% and computers +0.4%. Excluding high-tech, manufacturing output +0.4%.
Capacity utilization rates are now 0.3 percentage points above long-term averages for total industry and 0.6 percentage points above the long-term average in manufacturing.
Inside the number: Deutsche Bank economist Joseph LaVorgna argued that there's strong empirical evidence that the correlation between capacity utilization and inflation has broken down.
"We conclude there may be room for capacity utilization to rise several percentage points further before significant upward pressure on inflation begins to emerge."
Despite parabollically rising commodities prices due to an orchestrated production squeeze, so far, there's little indication of any capacity restraints.
Private industry has not greatly expanded capacity to meet growing demand, even though it has plenty of cash on hand, cheap credit and increased margins to justify the expansion or development of alternative sources.
The capacity of the nation's industrial sector has grown only 1.8% in the last year, well below the 3.1% annual average in the 25 years before the 2001 recession.
Outside of high-tech, factory capacity has grown just 0.7% since the recession started five years ago.
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