Economic News Blog
Posted by: Steven Kline, Jr. 20. May 2015

Capacity Utilization Contracts for Second Month in a Row

Durable goods capacity utilization was 76.3% in April 2015. That was the lowest capacity utilization reading since January 2014. The month-over-month rate of change was -0.5%, which was the second month in a row of month-over-month contraction. 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 has grown at a slower rate the last seven months. 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 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: aerospacecustom processorspetrochemical processorsplastics/rubber productsprintingtextiles/clothing/leather goods

Decelerating Growth: automotiveconstruction materialsdurable goodsfood/beverage processingforming/fabricating (non-auto)furnituremachinery/equipment; primary metalswood/paper

Accelerating Contraction: electronics/computers/telecommunications

Decelerating Contraction: none

 

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