Durable Goods Production Grows at Fastest Rate since July 2012

According to the Federal Reserve, the durable goods industrial production index was 107.0 in July 2014. This was the lowest level of durable goods production since February, but July is typically a slow month for production due to planned plant shutdowns. More importantly, durable goods production was 7.1% higher than it was last July. This is the fastest rate of month-over-month growth since July 2012. The month-over-month rate of change has grown faster each of the last three months. Also, July was the 18th straight month that the durable goods production index has set a record high for the given month. The annual rate of change accelerated to 5.0%, which was the fastest rate of annual growth since June 2013. The annual rate of change has been growing faster for five months.

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 have slowed in recent months and are growing at their slowest annual rate since August 2013. Consumer durable goods spending is still growing a relatively strong rate and above its historical average. Based on historic correlations and lag times, industrial production is likely to see accelerating annual growth for the next three to nine months.

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; appliances; automotive; custom processors; durable goods; food/beverage; forming/fabricating (non-auto); furniture manufacturing; HVAC; industrial motors/hydraulics/mechanical components; machinery/equipment; medical; metalcutting job shops; military; off-road/construction machinery; oil/gas-field/mining machinery; petrochemical processors; plastic/rubber products; power generation; primary metals; printing; pumps/valves/plumbing products; ship building

Decelerating Growth: construction materials; electronics/computers/telecommunications; wood/paper products

Accelerating Contraction: hardware

Decelerating Contraction: textiles/clothing/leather goods