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Industrial Operating Rate Holds at 81.2% of Capacity

October 20, 1987|Associated Press

WASHINGTON — The operating rate at America's factories, mines and utilities was unchanged in September at 81.2% of capacity, the highest level in three years, the government said Monday.

The Federal Reserve said a pickup in oil and gas production offset weakness in other sectors of the economy in September to leave the overall operating rate at the same level as August.

The operating rate last month was 2.4 percentage points higher than it was a year ago as American industry has shown a steady rebound after two years of declining operating rates caused by the huge foreign trade deficits.

The 81.2% rate matches that of September, 1984, and is the highest since American industry operated at 81.8% of capacity in August, 1984.

Momentum Slowing

Analysts have credited this upturn to the weaker dollar, which has boosted sales of American exports on overseas markets.

But economists noted that manufacturing orders have been weak in recent months and that production has shown little improvement since July, indicating that the gains in U.S. manufacturing are beginning to taper off.

"After a strong burst this summer, the industrial sector has begun to slow its momentum," said Allen Sinai, chief economist of Shearson Lehman Bros. in New York.

By sector, manufacturers operated at 81.5% of capacity last month, off a slight 0.1 percentage point from August.

The operating rate at factories making durable goods, items expected to last three or more years, was unchanged at 78.8% of capacity in September. The rate for non-durable goods edged down to 85.5% of capacity, compared to 85.7% in August.

Most manufacturing industries showed only small changes in September with the exception of primary metal manufacturers and auto makers.

The operating rate at auto plants fell to 75.2% last month, down a full 2 percentage points from August, as auto makers continued to reduce production in the face of high backlogs.

Mining Rate Higher

Operating rates at steel mills and other primary metal manufacturers climbed to 84.2% of capacity in September, up 1.6 percentage points from August, continuing an upward trend in this industry evident during the last year. Since September, 1986, primary metal manufacturers have enjoyed a 15.5 percentage-point increase in operating rates, reflecting increased production and the closing of some steel mill capacity.

The mining industry, which includes oil and gas well drilling, saw the operating rate climb to 78.2%, up from 77.4% in August as this industry continues to enjoy a rebound brought on by rising oil prices.

U.S. utilities operated at 80.8% of capacity in September, unchanged from the August rate.

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