|Release Date:||Released monthly, about 16 days after the previous month ends|
|Release Time:||At 10:15am Eastern US time|
|Released By:||Federal Reserve|
The most important of the Capacity Utilization data comes out of the United States. It is published by the US Federal Reserve Bank along with the Industrial Production data for the United States. The Capacity Utilization Rate is a measure of the percentage of available resources and raw materials being utilized by manufacturing industries, mining companies and utilities. It is a measure of the intensity with which labor and capital are used in production.
Time of ReleaseThe Capacity Utilization rate is released monthly, about 16 days after the previous month ends. The data measurement reviews the activity for the last month. The time of release is 10.15am Eastern US time. The news release is of moderate market impact. Information about the news release is obtainable from the website of the Federal Reserve, as well as from several independent news agencies such as Bloomberg and Thomas Reuters.
Snapshot of capacity utilization data from the website of US Federal Reserve
Interpreting the Data
Capacity utilization usually increases with rising demand for a product, but weakens when demand for the product produced by a company drops off. When capacity utilization is low, firms can afford to increase employment and use their capital more without incurring additional costs, and they therefore will not need to raise prices to make a profit. When there is so much demand for a product and a company or industry has almost reached maximum capacity for pushing the product into the market, they respond by raising prices, and the higher costs are usually passed on to the consumer. That is why capacity utilization is used as an indicator of consumer inflation. Indeed, it is believed that inflation is very likely when capacity utilization rises above 85%.
If the actual figure is better than forecast, it is good for the USD. If the actual is worse than forecast, it is bad for the USD. This is not surprising since a direct relationship exists between inflation and the value of a currency. It therefore follows that any factor that tends to cause an increase in inflationary pressures will aid the value of a currency, while factors that reduce inflationary pressures will depress the value of a currency.
The data itself is not tradable because of the moderate market impact, but it is one of the data that must be studied in order to get an idea of what the Core Consumer Price Index (Core CPI) will be in the US later in the month when that data is released. So it is a leading indicator of consumer inflation and must be used as such.