The percentage of production potential of a company, industry, or entire economy that is in use.
Also known as the operating rate, this is a figure expressed as a percentage out of the 100% of potential output. For example, if a company is producing at a 90% capacity utilization rate its output is 90% of the maximum that it could be given the resources that it possesses. Maximum output tends to be less than 100% because neither employees nor machinery can be expected to sustain work at full potential. Unforeseen complications inevitably arise, such as breakage of machinery, and in order to be productive in the long term it is ideal to allow a comfortable rate of production, achieved through policies such as allowing vacation.
See also Capital Utilization Rate economic reports for
United States,
Canada and
Japan
