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Factory Operating Rate Sags to a 33-Month Low

August 19, 1986|Associated Press

WASHINGTON — American factories' operating rate dropped to 78.2% last month as the third straight monthly decline sent the rate to its lowest level since 1983, the government reported Monday.

Factory use was down across the board--in manufacturing, mining and utility output.

The Federal Reserve Board figures followed Friday's report that overall industrial production also declined for a third straight month in July.

Analysts, while predicting no imminent recession, have said they see no indications that the national economy will rebound soon, although the Reagan Administration is still forecasting a comeback in the second half of this year.

In July, the new report said, overall capacity utilization declined 0.2 percentage points.

Auto Plants Slip 3.4 Points

Auto plant utilization declined 3.4 percentage points--to 76.1% of capacity--nearly wiping out the 4.2-point gain of the previous month.

There were also significant declines in the use of factories involved in producing instruments, petroleum products and rubber and plastic goods.

Smaller declines were reported for most other industries, the report said.

Increases for two categories--primary metals and electrical machinery--reflected the return to work of employees who had been on strike in June.

The national capacity utilization rate, which is now at its lowest level since the 77.9% of November, 1983, has fallen 2.6 percentage points in the last six months and 3.25 points since reaching 82% in July and August of 1984--the high point since the 1981-82 recession.

Since that high point, rates have fallen 12 percentage points for mining--mostly because of price-caused declines in oil well drilling--and nearly 2 percentage points for utilities.

The July rates in major categories were 78.5% for manufacturing, down from 78.7% in June; 73.8% in mining, down from 74.1%, and 81% for utilities, down from 81.2%. Because of underutilized capacity, businesses are not undertaking greater capital spending, which would accelerate growth, analysts say.

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