Durable Goods Production at 2nd Highest Level Ever

According to the Federal Reserve, the durable goods industrial production index was 111.3 in August 2014. This was the second highest level for the index ever. And, August was the 19th consecutive month that the index set a record high for the given month. The month-over-month rate of growth was 5.6%, which was the slowest rate of growth since April 2014. But, the general trend has been one of accelerating growth. Therefore, the annual rate of has accelerated to 5.0% in August, which is up from 4.2% in February 2014. 

For the first time I have attempted to forecast the durable goods production index. In August, I was too low by just 0.3%. My forecast calls for the rate of growth in durable goods production to remain flat through the remainder of 2014 with a slight acceleration in the rate of growth to 5.5% in early 2015. By the summer of 2015, I expect the rate of growth to have decelerated to 4.1%.

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 relatively fast rate, but the rate of growth has slowed significantly and will likely continue to slow. 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; durable goods; food/beverage; forming/fabricating (non-auto); furniture manufacturing; machinery/equipment; medical; metalcutting job shops; off-road/construction machinery; oil/gas-field/mining machinery; petrochemical processors; plastic/rubber products; primary metals; printing; textiles/clothing/leather goods

Decelerating Growth: appliances; automotive; construction materials; electronics/computers/telecommunications; HVAC; industrial motors/hydraulics/mechanical components; military; power generation; pumps/valves/plumbing products; ship building; wood/paper products

Accelerating Contraction: hardware

Decelerating Contraction: none