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The US factory utilization rate rose to 80.7 percent in February, up from January's 79.9 percent, the Federal Reserve reported Friday. In February 1983, the capacity rate stood at 71.0 percent.
As factories get closer to full capacity, company executives make expansion plans. This may be good news for workers, but it could also increase competition for money in the credit markets, thus pushing up interest rates. Also, businesses can increase production without hiring more workers by increasing overtime, boosting automation, and using more subcontractors.
Earlier in the week, the Commerce Department estimated that inflation-adjusted plant and equipment spending would rise 12 percent in 1984, the largest such increase since a 13.4 percent rise in 1966.