Tuesday, December 15, 2009

Capacity Utilization and Production Rebounding

Reuters reports:

U.S. industrial output rose firmly in November as the manufacturing sector extended a recovery that economists hope will help turn around the ailing labor market.

Production climbed 0.8 percent, the Federal Reserve said on Tuesday, well above forecasts for a 0.5 percent gain. The strides were powered in part by the automotive sector, and came despite a sharp drop in utility output. Capacity utilization, the amount of the nation's industrial capacity being put to use, rose to 71.3 percent in November from a revised 70.6 in October, its highest level since last December but still well below the long-range average.


An Anonymous reader didn't like the post.
Come on Jake. This reporting is hugely inaccurate. If we really want BS spin reporting, we'll just watch CNBC! A prosuction increase of .8 percent is not significantly above a forecast of .5 percent. This is noise. Capacity Utilization is much closer to the bottom than 2007 levels. Your graph does not illustrate that at all.
While I did enjoy his candor... my response:
I will defend myself and say I used the word "spike" not "rebound".

After the freefall we saw from late 2008 through early 2009, I'll agree that we need a "spike" to get the economy back to trend, BUT a rebound is better than a continued decline.
And the data seems to show just that.

Does this mean the "rebound" is sustainable? Not necessarily, but it has been a rebound none-the-less.

Source: Federal Reserve