Capacity Utilisation

The indicator of the degree of industrial capacity utilization. Capacity utilization shows the degree of economic industrial capacity utilization. This is quite a good indicator of economic stocks for the future. The optimum value for this indicator is 81.5. The value of more than 85 signals that the economy is overheated. Though even excessive value of this indicator may trigger currency strengthening, as high pressure economy brings about inflation, which signals that the Fed may raise discount rate. In case the value of the indicator is much lower than the optimum one it signals weak economy and may trigger currency weakening. Price of suppliers of goods may influence estimating as this price increase may push stocks and bonds prices down. CU approach to the threshold level (about 85) is treated as a signal of possible inflation.

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