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BPEA Article

Capacity in Manufacturing

Abstract

INFORMATION ABOUT THE AMOUNT of available industrial capacity and about the degree of its utilization are employed in many forms of economic analysis. Data on utilization-operating rates have proven useful in explaining price movements and in forming projections of the future course of business capital investment. Less directly, operating rates can help explain the cyclical behavior of productivity and, through that, changes in profits and income shares. In some industries, operating rates could contribute to explanations of the size of order backlogs and, at times, could offer clues to real limitations on the expansion of output.

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