Capacity Utilization Report for 4th Quarter 2002
NFPA has developed the following spreadsheet with capacity utilization and production data obtained from the Federal Reserve Board.
The spreadsheet can be used on its own, or CSS participants can use the data in the NFPA Electronic Statistical Toolkit by cutting
and pasting data series from the Data Source tab of this file into the custom drivers section of their CompanyData.xls file.
More information about the Toolkit can be found at www.nfpa.com.
The Federal Reserve uses an intricate methodology to derive overall capacity utilization figures, but for any given plant,
capacity utilization is the percent of maximum potential output that is actually produced. Or, the rate at which total capacity is used.
The Federal Reserve defines capacity utilization for any given industry as "equal to an output index (seasonally adjusted) divided by a
capacity index." More information on the calculation of capacity indexes, output indexes, and capacity utilization figures can be
found at
http://www.federalreserve.gov/releases/G17/About.htm
In addition, some of the past numbers may change slightly each
month, as the new month's data affects seasonal adjustments, and the federal reserve makes revisions to prior months. Finally, the federal
reserve makes adjustments to data at year-end. Because seasonal adjustment formulas consider prior years, year end adjustments for
2002 affected data back to the beginning of 1992.
There appears to be some historical relationship
between capacity utilization and NFPA's Total
Fluid Power Shipment data, as shown in this chart
created in the NFPA Electronic Statistical Toolkit.
In addition, capacity utilization has proven to be an
accurate predictor of price inflation. As capacity
utilization rises for any given manufacturing sector,
producers in that sector, producers are increasing
production without increasing capital inputs (mainly
plant size). Although opinions vary, it is typically felt
that when the total industry rate of capaci