Fed Capacity Utilization shows the percentage of working load in US companies. The index calculation includes 89 sectors of the manufacturing, mining and energy industries.
The industrial sector provides the larger share of changes in the national output. Therefore, detailed data on the sector state help distinguish structural changes in the national economy and make predictions about its future development.
The capacity utilization is calculated as the ratio of output to the power index (the maximum production level that can be maintained by the company). Power indices are calculated for all industries. Data for calculation is collected monthly from government sources (Energy Information Administration, Census Bureau, etc.).
Economists usually interpret the capacity utilization index along with the industrial production index. It shows how efficiently companies use equipment, technology and labor, as well as point to production activity in the country. The capacity utilization level exceeding 82% indicates an increase in production allowing you to forecast the price growth or supply shortages in the near future.
The chart of the entire available history of the "Federal Reserve System (Fed) 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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