Factories Operate at 79.8% of Capacity, Best Rate in a Year

From Associated Press

American industry showed signs of a rebound Monday, with the government reporting that the nation's industrial operating rate rose in February and a private survey showing greater optimism among businesses for higher 1987 sales and profits.

The Federal Reserve Board said the industrial operating rate rose a moderate 0.2 of a percentage point in February, to 79.8% of capacity, spurred by a big increase in production of cars and other durable goods.

The rise pushed the overall operating rate to its highest level since February, 1986, when the nation's factories, mines and utilities operated at 80.2% of capacity. The rate was unchanged in January and rose 0.2 points in December.

Analysts said the steep decline of the dollar during the past year and a half, which makes U.S. goods more competitive abroad, was helping manufacturers regain lost markets.

The weaker dollar was also credited for the increased optimism among business executives polled by Dun & Bradstreet.

The business information company said expectations of higher sales and profits in the second quarter had rebounded to the high levels reached in mid-1986 and 1985, largely because of the benefits anticipated from tax reform and the cheaper dollar.

The quarterly survey of more than 1,400 executives indicated that expectations of higher sales increased to 72% in the second quarter from 69% in the first quarter. Higher profits were predicted by 67% of firms, compared to 63% in the first quarter.

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