Industrial Capacity Use Hits Record Low

Use of industrial capacity fell to its lowest point ever in May as output of factories, mines and utilities slipped another 1.1 percent from April and fell 13.4 percent below last May’s level.

The nation’s industries used only 68.3 percent of available capacity, according to a monthly report from the Federal Reserve. Prior to the current recession, the lowest rate since the Fed started this series of records in 1967 was 70.9 percent in December 1982. Since February this year, the rate of capacity utilization has been below that mark.

Industrial production decreased 1.1 percent in May after having fallen a downward-revised 0.7 percent in April. The average decrease in industrial production during the first three months of the year was 1.6 percent, said the Fed.

Manufacturing output moved down 1 percent in May with broad-based declines across industries. Factory production was more than 15 percent below its year-earlier level. The factory operating rate decreased 0.6 percentage point to a historical low of 65 percent in May; prior to this recession, the low for this series, which begins in 1948, was 68.6 percent in December 1982. The production of durable goods fell 1.8 percent with declines in most categories. The largest decreases were in motor vehicles and parts and in machinery.

The output of mines dropped 2.1 percent, and the output of utilities fell 1.4 percent. At 95.8 percent of its 2002 average, overall industrial output in May was 13.4 percent below its year-earlier level.

Contact Thomas L. Gallagher at tgallagher@joc.com.