Economic News Blog
Posted by: Steven Kline, Jr. 16. May 2017

Capacity Utilization Grows at Fastest Rate Since January 2015

(Positive) Durable goods capacity utilization was 75.3 percent in April 2017. This was the highest rate of capacity utilization since May 2015. The one-month rate of growth was 0.9 percent, which was fifth straight month of growth. also, it was the fastest rate of growth since January 2015. The annual rate of change contracted for the 19th straight month, but the rate of contraction decelerated for the seventh consecutive month.   

Since June 2008, the GBI: Metalworking backlog index has been a very good leading indicator of durable goods capacity utilization. The 1/12 rate of change for the backlog index has grown at a strong rate for 10 months in a row. In April, the annual rate of change grew for the fifth month in a row. The backlog index tends to lead capacity utilization by seven to 10 months. Therefore, the trend in the backlog index shows that the rate of change in capacity utilization should start growing soon.

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: automotive, food/beverage, printing, wood/paper

Decelerating Growth: construction materials

Accelerating Contraction: custom processors, furniture, plastic/rubber products

Decelerating Contraction: aerospace, durable goods, electronics/computers/telecommunications, forming/fabricating (non-auto), machinery/equipment, petrochemical processors, primary metalstextiles/clothing/leather goods

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