Economic News Blog
Posted by: Steven Kline, Jr. 16. June 2015

Capacity Utilization Contracts at Fastest Rate since December 2009

Durable goods capacity utilization was 76.5 percent in May 2015. Capacity utilization was unchanged over the last four months. But, the one-month rate of change has contracted for three straight months. In May, the rate of contraction was the fastest since December 2009. The annual rate of growth decelerated for the third straight month to its lowest rate since June 2014. 

Since June 2008, the Gardner Business Index backlog index has been a very good leading indicator of durable goods capacity utilization. Our backlog index contracted in May for the first time since January 2014. The trend in the backlog index shows that capacity utilization has seen its peak rate of growth this cycle and that capacity utilization should see decelerating growth, and possibly contraction, for the remainder of 2015.

We use capacity utilization as a leading indicator for a number of industries, although it is not tracked for as many industries as industrial production. You can see the trends in capacity utilization for a number of industries below.

Accelerating Growth: petrochemical processorsprintingtextiles/clothing/leather goods

Decelerating Growth: aerospaceautomotiveconstruction materialscustom processorsdurable goodsforming/fabricating (non-auto)furnituremachinery/equipment; plastics/rubber productsprimary metalswood/paper

Accelerating Contraction: electronics/computers/telecommunicationsfood/beverage processing

Decelerating Contraction: none

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