Capacity utilization
Capacity utilization continues its recovery higher
  • US industrial production +0.9% versus 0.4% estimate
  • prior month revised to 0.9% from 0.5%
  • US capacity utilization 78.3% versus 77.8% estimate
  • last month revised to 77.7% from 77.6%
  • manufacturing output for March increased 0.9% versus 0.6% estimate. Last month saw an increase of 1.2%
  • industrial production year on year rose 5.47% versus 7.5% last month

Other highlights from the Fed on the state of the manufacturing sector:

  • Total industrial production advanced 8.1 percent for the first quarter.
  • The output of motor vehicles and parts jumped 7.8 percent,
  • motor vehicle production contributed to increases of 3.9 percent
  • consumer durables and transit equipment increased 5.2 percent
  • Excluding the large gain in motor vehicles and parts, the output of durable goods increased 0.4 percent in March, with most industries posting gains; only nonmetallic mineral products, primary metals, and furniture and related products recorded decreases
  • The index for utilities increased 0.4 percent,
  • The index for mining advanced 1.7 percent.
  • At 104.6 percent of its 2017 average, total industrial production in March was 5.5 percent above its year-earlier level.
  • Capacity utilization climbed to 78.3 percent, a rate that is 1.2 percentage points below its long-run (1972–2021) average.

Although, the capacity utilization is still below it's long run average by 1.2% (from 1972), it still is at its highest level since January 2019. The 2018 cycle high reached 79.9%.

As the, economy continues to chug along and shortages in autos and building materials continue as industries recover from the pandemic, supply chain issues, and employment remains tight, that can in turn lead to more inflation and  inflation  expectations before reaching higher capacity limits. If workers are needed to source higher levels of capacity, that could be a problem.

The good news is manufacturing advancements can require less workers as automation advancements can increase capacity without the need for added manpower.