Durable Goods Production Stays Near Record High
According to the Federal Reserve, the durable goods industrial production index was 111.9 in October 2014. This was the third highest level for the index ever. And, October was the 21th consecutive month that the index set a record high for the given month. The month-over-month rate of growth was 4.5%, which was the first time that the rate of growth was slower than 5.0% since April 2014. The annual rate of growth decelerated for the first time since February 2014.
For the first time I have attempted to forecast the durable goods production index. In October, I was too high by just 0.5%. My forecast calls for the rate of growth in durable goods production to remain above 110.0 in the last two months of the year with a slight acceleration in the rate of growth to 5.4% in early 2015. By the summer of 2015, I expect the rate of growth to have decelerated to 4.0%.
The best leading indicators for durable goods production are housing permits, capital goods new orders, and consumer durable goods spending. Housing permits are growing at a decent rate. The rate of growth in housing permits has slowed significantly but may bottom out soon. Capital goods new orders are growing at their fastest rate since April 2012. Consumer durable goods spending is still growing at a relatively strong rate and above its historical average.
We track industrial production and its leading indicators for a number of industries. Click on the links below to see how each industry is faring.
Accelerating Growth: aerospace; custom processors; food/beverage; forming/fabricating (non-auto); furniture manufacturing; off-road/construction machinery; petrochemical processors; plastic/rubber products; printing; textiles/clothing/leather goods
Decelerating Growth: appliances; automotive; construction materials; durable goods; electronics/computers/telecommunications; HVAC; industrial motors/hydraulics/mechanical components; machinery/equipment; medical; metalcutting job shops; military; oil/gas-field/mining machinery; power generation; primary metals; pumps/valves/plumbing products; ship building; wood/paper products
Accelerating Contraction: hardware
Decelerating Contraction: none
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