June Capacity Utilization Contracts 1.5 Percent

Durable goods capacity utilization was 76.5 percent in June 2015. This was the lowest capacity utilization rate since February 2014. The one-month rate of change contracted 1.5 percent, which was the fastest rate of contraction since December 2009. This was the fourth month in a row that the rate of contraction accelerated. The annual rate of change continued to grow, but the rate of growth has decelerated since February 2015. The annual rate of growth was its slowest since April 2014.  

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 in June for the second month in a row. The trend in the backlog index shows that capacity utilization will likely be contracting by the end of the year.

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: food/beverage processing; petrochemical processors; textiles/clothing/leather goods

Decelerating Growth: aerospace; automotive; construction materials; custom processors; durable goods; furniture; machinery/equipment; plastics/rubber products; primary metals; printing; wood/paper

Accelerating Contraction: electronics/computers/telecommunications; forming/fabricating (non-auto)

Decelerating Contraction: none