Only 69.1 percent of the nation's factory capacity was being used last month, a drop from 69.6 percent in August and the lowest figure for seven years, the Federal Reserve reported yesterday.
The September figure showed manufacturing capacity just 0.1 percent higher than the previous post-World War II low reached in 1975. Manufacturing has been particularly hard hit in this recession, with huge job losses as well as idle plants.
As industry cut back its production last month, most sectors of manufacturing industry cut back capacity utilization. The auto industry is operating at only 55.3 percent of capacity. Equipment, fabricated metals and a wide varity of other manufacturing industries also reported further deterioration, the Federal Reserve report said.
Both industrial production and factory usage have declined for 12 out of the past 14 months. Many forecasters hoped for an upturn to begin in the middle of the year but, instead, the economy appears to have suffered what one senior Reagan administration official termed "a second wave of recession."
For as long as industry is cutting back on operating rates, there is little chance of any new investment in plant and equipment. President Reagan originally promised that his economic program would stimulate both savings and investment. Increased consumer saving is hurting industry now as it results in less spending. Meanwhile, business is cutting back plans for new spending since it cannot use all its existing capacity.
The September operating rate for production of durable "big ticket" items fell to 61.8 percent, the lowest since records began in 1967, yesterday's report showed. Durable goods, such as washing machines, autos and furniture are especially sensitive to high interest rates and tend to lose more during recessions than non-durable goods for immediate consumption.
The capacity utilization rate for materials production dropped by 1.3 percentage points last month to 61.8 percent, although this was pulled down partly by the effect of September's railroad strike on coal mining.
Factories making non-durable goods increased output in September, so the operating rate went up to 71.7 percent for this sector. It includes textiles, paper and chemicals.
As industry has cut back production and operating rates, unemployment has soared to a post World War II record of 10.1 percent last month. The most recent weekly figures for state unemployment insurance suggest that joblessness is still climbing, while continued dismal figures for retail sales show that there is no reason for industry to boost its production yet.