Dirk McCoy

Capacity's Comeback Strongly Indicates Recession's End

The trend in downward capacity utilization will continue as long as labor price controls dampen utilization. Further weakening of the dollar may mitigate this some, but having filled out these reports in the past I know that what is currently called "capacity" is understated in terms of potential capacity, and overstated in terms of short term capacity. The difference lies in capital investment, and companies will be hesitant to do that if they don't sense they can be competitive over the longer term such that they can achieve payback on their investment.