The European Central Bank in its September 2009 Monthly Bulletin (pdf) reports that capacity utilisation in the euro area has fallen to a new low of 69.5% in July 2009.

Even though the rate of the decline has decreased the rate is significantly below the long term average of 81.6% since 1985 and far below the low reached in the 1992 to 1993 recession.

Source: European Central Bank Monthly Bulletin September 2009 p. 69-70

The steepest fall in capacity utilisation was recorded in the capital goods which declined 20%, from a record high in January 2008, to 67.6% in July 2009.

Surprisingly capacity utilisation in the manufacturing of motor vehicles, trailers and semi-trailers fell to levels close to 60%. and this in spite of the scrapping allowances in several countries in the euro area countries which increased utilisation only slightly.

With the scrapping allowances running out in Germany in September that does not bode well for future readings.

Source: European Central Bank Monthly Bulletin September 2009 p. 69-70

Just looking at the above graph.

If capacity utilisation in the 1992 recession dropped 17% (from 91% to 74%) and in the current recession it has declined 30% (from 92% to 62%) then the decline is nearly 1.8 times as large as the decline in the 1992 recession.

And there is a possibility it will decline further as car scrapping schemes run out.

So much for green shoots.

 Tim du Toit is the editor of Eurosharelab. Kindly note that this blog is published for information purposes and is not investment advice. Please refer to our disclaimer. To subscribe to our weekly newsletter, click here.

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