Durable Goods Production Growth Accelerates

According to the Federal Reserve, the durable goods industrial production index was 111.2 in December 2014. In six of the last seven months the index has been above 111.0. Th index is at all-time highs and about 10% of peak levels before the financial collapse in 2008. December was the 23rd consecutive month that the index set a record high for the given month. The month-over-month rate of growth was 6.6%, which is the fastest rate of growth since July 2014 and the second fastest since November 2012. The annual rate of growth remained is at 5.3%, which is the fastest rate of annual growth since June 2013. 

In December, my forecast for durable goods industrial production forecast was too low by 1.1%. That was by far my biggest miss in my short time forecasting industrial production. My forecast calls for the rate of growth in durable goods production to remain above 110.0 through June 2015 with a slight acceleration in the rate of growth to 5.6% 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 decent rate. The rate of growth in housing permits has slowed significantly but may bottom out soon. Capital goods new orders continue to grow at a strong rate. 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;  automotive; construction materials; custom processors; durable goods; electronics/computers/telecommunications; food/beverage; furniture manufacturing; industrial motors/hydraulics/mechanical components; machinery/equipment; medical; military; oil/gas-field/mining machinery; off-road/construction machinery; petrochemical processors; plastic/rubber products; power generation; primary metals; textiles/clothing/leather goods

Decelerating Growth: appliances; forming/fabricating (non-auto); HVAC; metalcutting job shops; printing; pumps/valves/plumbing products; ship building; wood/paper products

Accelerating Contraction: hardware

Decelerating Contraction: none