Capacity Utilization

1) Operations managers, business owners, economists, and bankers should all be interested in capacity utilization. Capacity utilization is a measure of a company’s actual output in comparison to its potential output. By understanding capacity utilization, operations managers or business owners will know how effective their production is, if they have the ability to produce more, or if they are on the verge of capacity. Economists and bankers are interested in capacity utilization because it has been observed that as utilization rises above ~82%, inflation is likely to occur. Excessive capacity also means that demand is not high enough to encourage expansion of production.
2) Capacity utilization statistics are used by administering surveys to goods-producing industries at the plant stage. The survey is carried out by the US Federal Reserve Board and recorded in the FRB utilization index. Another survey is given by the Institute of Supply Management. The FRB issues the survey and publishes data on a monthly basis and additionally produces yearly numbers.
3) Released in February 2010 by the FRB, the most recent capacity utilization for all US industries was 72.7%. This number is up 2.1% from February 2009, but overall capacity has dropped 1.2% since that time. In specific industries there is much variance, with numbers ranging from 83.1% in utilities industries and 69% in manufacturing. Overall, these numbers are considerably lower than the industry-wide average of 80.6% since 1972. All industries other than utilities have experienced decreased overall capacity since February 2009. The all-time high, industry-wide capacity utilization was 85.1% 1989. Many countries operate at between 70% and 90% capacity. In 2004 the US operated at 79.7% capacity while Canada and Japan operated at 87% and 84% respectively.

Capacity Utilization statistics were collected from:
http://www.federalreserve.gov/Releases/g17/Current/default.htm

Capacity Utilization Information was also collected from:
http://en.wikipedia.org/wiki/Capacity_utilization