Economic News Blog
Posted by: Steven Kline, Jr. 29. November 2016

Durable Goods Capacity Utilization Highest in Three Months

(Negative) Durable goods capacity utilization was 76.2 percent in October 2016. The one-month rate of change, which was -0.2 percent in October, contracted for the eighth month in a row and 15 of the last 17 months. The annual rate of change contracted for the 10th straight month but was unchanged for the third 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 ninth 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 has likely bottomed out.

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: textiles/clothing/leather goods

Decelerating Growth: automotive, furniture

Accelerating Contraction: construction materials, custom processors, durable goods, electronics/computers/telecommunications, food/beverage, petrochemical processors, plastic/rubber products, printing

Decelerating Contraction: aerospace, forming/fabricating (non-auto), machinery/equipment, primary metals, wood/paper

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