Economic News Blog
Posted by: Steven Kline, Jr. 16. May 2014

Capacity Utilization Increases 0.9% in April 2014

According to the Federal Reserve, durable goods capacity utilization was 76.1% in April 2014. The rate of capacity utilization was 0.9% higher than it was in April 2013. This is the third month in a row of accelerating growth in the monthly rate of change. The annual rate of change inched up to 1.1%, which is the first time the annual rate of change increased since October 2013.

The backlog index from our metalworking business index looks to be an excellent leading indicator for durable goods capacity utilization. The rate of change in capacity utilization has been following the rate of change in the metalworking backlog index nearly tick for tick. It appears that our backlog index leads durable goods capacity utilization by six to 12 months on average. Our backlog index has grown two of the last three months. The annual rate of change has grown faster each of the last three months. The strong upward trend since the summer of 2013 is pointing to a significant increase in durable goods capacity utilization, which further indicates an increase in capital spending.

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; durable goodspetrochemical processorsprimary metalsprinting; textiles, clothing, and leather goods

Decelerating Growth: aerospace; construction materialscustom processors; furniture manufacturingplastics and rubber; wood and paper

Accelerating Contraction: electronics, computers, and telecommunicationsfood and beverage processing

Decelerating Contraction: forming and fabricating (non-auto); machinery and equipment

Comments are reviewed by moderators before they appear to ensure they meet Gardner Business Media’s submission guidelines.
blog comments powered by Disqus