20% of US industry on 'idle'

Use of the nation's manufacturing capacity was 78.9 percent in May, two percentage points behind April and the lowest level since February 1976, the Federal Reserve Board said Monday.

The drop in the utilization rate reflects the steepening recession that has witnessed a sharp falloff in consumer spending and a rapid increase in unemployment -- 7.8 percent -- as factories continue to lay off workers.

Producers of durable goods -- products designed to last more than three years -- reduced factory use 3 percent to 75.9 percent. Producers of nondurable goods cut back a more moderate 1.8 percent, operating at 84.8 percent of capacity in May.

May's overall utilization rate compares with 80.9 percent in April and 78.8 percent in February 1976.

The decline in factory use was widespread, cutting across virtually every manufacturing category, with significant cutbacks in the auto, steel, and petroleum industries. Factories producing textiles, paper, chemicals, nonferrous metals, machinery, aircraft, instruments, stone, clay, and glass also had "sizable cutbacks" in May, the Federal Reserve said.