Economic News Blog
Posted by: Steven Kline, Jr. 15. June 2016

Durable Goods Capacity Utilization Contraction Accelerates

(Negative) Durable goods capacity utilization was 75.4 percent in May 2016. The one-month rate of change, which was -1.2 percent in May, contracted for the third month in a row and 10 of the last 12 months. The annual rate of change contracted at an accelerating rate for the fifth month in a row.   

Since June 2008, the Gardner Business Index backlog index has been a very good leading indicator of durable goods capacity utilization. The annual rate of change for our backlog index contracted at a decelerating rate for the fourth month in a row. The trend in the backlog index shows that the rate of change in capacity utilization could bottom out in the August or September time frame.

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: none

Decelerating Growth: automotiveelectronics/computers/telecommunicationsfurniture; printing  

Accelerating Contraction: aerospacecustom processorsdurable goodsforming/fabricating (non-auto)machinery/equipmentpetrochemical processorsplastics/rubber productstextiles/clothing/leather goodswood/paper

Decelerating Contraction: construction materialsfood/beverage processingprimary metals 

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