Economia globaleUSA > Capacity Utilization

Capacity utilization in the USA 1970 - 2015

Utilization of capacity in the USA structurally changed

The article „The worldwide industrial production and the outlook“ indicates developments that are to be expected in the course of the worldwide economy. Against this backdrop this article highlights substantial changes in the course of industrial production in the US. A further article compares the courses of industrial production and national debt in the USA.

Two structural changes in the course of the utilization of capacity

Made in USA

Update February 15th, 2016 - The following diagram shows the course of the utilization of capacity during the last 45 years.

 

Two substantial changes in the course of the capacity utilization show up:

  1. The utilization of capacity has been dwindling on a long-term basis since the end of the 1960s, i.e. for 45 years.

  2. The drop in the utilization has been accelerating during the last 15 years. In this time the utilization of capacity sank around five percentage points from 85% to 80%. However, by five percentage points the utilization of capacity had already decreased in the time before from 90% to 85%. But this drop had happened within 30 years from 1968 to 1998, a period twice as long!
The utilization of capacity in the USA 1970 - 2015.
Source: G.17, published by Federal Reserve System of the USA. Utilization of capacity black line total industry, red line manufactauring. Trend lines by Quest Research.

By 2014 increasing, 2015 again decreasing utilization of capacity

Within the trend to long-term decreasing utilization, utilization of capacity approached with 79.1% in 2014 its pre-crisis level (80.5%). This indicated the top since the world economic crisis.

 

However, in 2015 utilization of capacity dropped again to 77.8% nearly three percentage points below the pre-crisis level.

Utilization of capacity of the US industrial production from 2007 to 2015.

Automation technology and decling utilization of capacity

Why has been declining capacity utilization over all the ups and downs of industrial production for 45 years?

The performance of the machines and plants is increasing more strongly and more dynamically than the markets’ absorbing power for output of the ever more powerful systems. Under these circumstances the direct way to higher profitability leads to further cost reductions in form of higher output per time unit. In this context automation technology is playing a key role. However, this tends to lowering in turn capacity’s utilization.

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