Friday, January 16, 2009

Capacity Utilization and Industrial Production Cliff Diving

by Calculated Risk on 1/16/2009 09:15:00 AM

From Greg Robb at MarketWatch: U.S. Dec. industrial production down 2%, down 11.5% in Q4

Capacity utilization ... fell to 73.6% from 75.2%. This is the lowest level since December 2001. Industrial output fell at an 11.5% rate in the fourth quarter.
emphasis added
Capacity Utilization Click on graph for larger image in new window.

This is a very sharp decline in industrial output, and industrial production is a key to the depth of the economic slowdown. Up until recently export growth had been strong, and the decline in industrial production had been mild. Now, with the global economy slowing sharply, industrial production and capacity utilization are falling off a cliff.

Also the significant decline in capacity utilization suggests less investment in non-residential structures for some time.