Capacity Utilization Rate

The capacity utilization rate measures the percentage of an economy's total industrial productive capacity, in manufacturing, mining and utilities, that is actually being used at a given time, published monthly by the US Federal Reserve alongside the Industrial Production Index from the same underlying survey data. A rate running persistently below its long-run average signals slack in the industrial economy and disinflationary pressure, while a rate pushing above roughly 80 percent has historically been associated with rising inflationary pressure as factories approach their physical output limits, making the measure a standard input into Federal Reserve policy discussions.