Capacity Utilization Telling a Strange Story
Capacity utilization is telling a very unusual story. Information technology –computers & peripherals, communication equipment and semiconductors — is operating at recession levels. Part of the story is import tablets and smart phones displacing personal computers. But there has to be more to the story.
Meanwhile, the rest of industry appears to be operating at near full operating rates. Manufacturing excluding info tech capacity is only a few percentage points below its 2007 peak. Given the long run downward slope of capacity utilization this is probably effectively full utilization
Are you implying that THIS is the best we can do? Oh shit!
It can do better. That said, 80-81 is probably the max. It has been declining for decades.
Overall capacity utilization will not be heading above 79%. That is what my research says. Yet, capacity utilization for the tech industry could be a function of costs, because capacity utilization is based on increasing production up to the point where unit costs do not significantly rise.
Something within the tech industry just became more efficient, and demand or price points may simply be constraining the potential capacity of production.
If price points are lower, they can fulfill demand with less total sales. Profits can be higher, but capacity production will be relatively less.