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This is the third one on the list and economist believes that is interrelated with the industrial production index. Basically the capacity utilization rate is the calculation of the output produced by the manufacturing industries. The CUR measures the proportion of the industrial facilities that are being used by the industry in order to produce the desired results. By facilities it means the plants equipment machinery and other thing used for the production purpose. If the overall production of the economy would increase it would result in the increase of CUR which would show the demand of the equipments and similarly if there would be a decrease in production the industry would not be looking at the CUR (Farago 2002).

2.4.5 Interest rates

Interest rates are also an important factor that contributes in predicting a recession. In the pre recession period what government does is that it increases the interest rate in order to slow the economy which is growing at an abnormal rate. When the interest rate gets high automatically the investments that were made by the private sector takes a break which ultimately results in the stability of the economy. The state bank of the country can reverse this action when there is an opposite situation means when there is no investment done by the public. The state bank drops down the interest rate so that the public can get encouraged by this and starts investing their money in the market (Farago 2002).

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