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Computer Output Continues To Drag

Factories producing computers continue to work at far lower rates than in the boom years of the 1990s.
American manufacturers of computers and related equipment continued producing their wares at a lackluster pace last month.

In November, factories producing computers worked at 76.6% of capacity, a mere 0.6% higher than they did in November, the Federal Reserve Board reported Tuesday. Such rates pale when compared with the output in the boom years of the mid-1990s, when capacity utilization rates averaged 86%. American computer makers aren't even using as much capacity as they averaged during the last 30 years of the 20th century, when capacity rates approached nearly 80%.

The Fed's industrial production numbers weren't very impressive, either. Industrial production in November rose 0.7% from October and 4.9% from a year earlier. The computer-sector's dreary performance, however, did outshine the overall index, which inched ahead 0.1% last month.

"The goods industry is beginning to turn upward again after suffering a setback in the prior two months, but production is still 5.6% below the June 2000 pre-recession peak," says Daniel Meckstroth, chief economist at the trade group Manufacturers Alliance/MAPI. "Industry needs a reaccelerating general economy and more export opportunities to employ idle capacity and thus stimulate a rebound in capital spending."

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