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: automotive; electronics/computers/telecommunications; furniture; printing  

Accelerating Contraction: aerospace; custom processors; durable goods; forming/fabricating (non-auto); machinery/equipment; petrochemical processors; plastics/rubber products; textiles/clothing/leather goods; wood/paper

Decelerating Contraction: construction materials; food/beverage processing; primary metals