Capacity Utilization Rate shows the percentage of the production capacity currently used. This is an indicator of growth of production and demand for manufactured goods.
If the used capacity is less than 80%, production is considered reduced. Growth in the indicator stimulates inflationary pressures and economic growth. In most cases, if the utilization rate is stably more than 80%, the rate will most likely start to rise.
Utilization Rate is a concept in economics and management accounting, which indicates how much of equipment production capacity the company or country is actually using. Therefore, it refers to the actual production, i.e. what was produced "actually" using the installed equipment compared to the potential volume of products which can be manufactured when the equipment is fully used.
The index value is defined as the maximum production volume that can be produced under standard conditions with a certain standard for operation days, equipment, and labor.
The index value that exceeds the forecast value has a positive effect on yen quotes. However, Japanese yen tends to be more affected by foreign indicators than domestic ones.
The chart of the entire available history of the "Japan Capacity Utilization Rate" macroeconomic indicator. The dashed line shows the forecast values of the economic indicator for the specified dates.
A significant deviation of a real value from a forecast one may cause a short-term strengthening or weakening of a national currency in the Forex market. The threshold values of the indicators signaling the approach of the critical state of the national (local) economy occupy a special place.
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