Capacity utilization rate shows the extent to which a country is able to mobilize its productive potential. The inverse relationship between capacity utilization rate and unemployment rate will help us make sense of this indicator. If a country does not use its productive potentials adequately, this is reflected in its capacity utilization rate. As the production levels drop, so does the capacity utilization rate. The drop in the capacity utilization rate leads to a rise in the rate of unemployment.
Just like the rate of unemployment, capacity utilization rate is also shaped by the structural features of a country’s economy. In Table 1, right axis give the capacity utilization rate (in percentage) in the manufacturing sector of Turkey. The average of this monthly series which begins from January 2007 and ends in May 2013 is 74%. In 2009, when the production and export levels dropped due to global economic crisis, the capacity utilization rate also dropped. Throughout the entire period, despite the positive growth rates in GDP, neither the unemployment rate which hovers around 10%, nor the the capacity utilization rate which hovers around 75% does not change signifcantly. This situation confirms once more the “jobless growth” phenomena that we discussed previously under the Unemployment and GDP Growth Rates entry.
From a comparative perspective (Table 2), between January 2001 and July 2013, Turkey’s capacity utilization rate followed a similar trend with that of Brazil and USA but more severely affected by the global economic crisis in 2009.
Sources:
Rate of Capacity Utilization dataset is downloaded from the Central Bank of the Republic of Turkey, “GENERAL STATISTICS” link.
Statistical Table: Capacity Utilization Rate of Manufacturing Industry (Weighted-NACE REV.2) – Central Bank (Monthly, %)
Unemployment dataset is downloaded from the website of Turkish Statistical Institute, “Labour Force Statistics” link.
Statistical Table: ”Seasonally Adjusted Main Labour Force Indicators”
Comparative dataset is downloaded from the OECD website, “Business Tendency and Consumer Opinion Surveys (MEI)” link.
Measure: “Rate of capacity utilisation”
