Durable Goods Production Second Highest Level Ever

According to the Federal Reserve, the durable goods industrial production index was 112.9 in September 2014. This was the second highest level for the index ever. And, September was the 20th consecutive month that the index set a record high for the given month. The month-over-month rate of growth was 5.3%, which was the sixth time in seven months that the index has grown by more than 5.0% compared to one year ago. The annual rate of growth has since February. 

For the first time I have attempted to forecast the durable goods production index. In September, I was too high by just 0.1%. My forecast calls for the rate of growth in durable goods production to remain unchanged 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 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; appliances; custom processors; durable goods; food/beverage; forming/fabricating (non-auto); furniture manufacturing; HVAC; machinery/equipment; medical; metalcutting job shops; off-road/construction machinery;  petrochemical processors; plastic/rubber products; primary metals; printing; textiles/clothing/leather goods

Decelerating Growth: automotive; construction materials; electronics/computers/telecommunications; industrial motors/hydraulics/mechanical components; military; oil/gas-field/mining machinery; power generation; pumps/valves/plumbing products; ship building; wood/paper products

Accelerating Contraction: hardware

Decelerating Contraction: none