Capacity Utilization Grows for Third Month
The annual rate of change will likely turn to growth from contraction in the second quarter.
(Positive) Durable goods capacity utilization was 76.2 percent in January 2017. The one-month rate of growth was 0.2 percent, which was third straight month of growth. The annual rate of change contracted for the 13th straight month, but the rate of contraction decelerated for the third consecutive month.
Since June 2008, the GBI: Metalworking backlog index has been a very good leading indicator of durable goods capacity utilization. The 1/12 rate of change for the backlog index has grown at a strong rate for seven months in a row. In January, the annual rate of change grew for the second month in a row. The backlog index tends to lead capacity utilization by seven to 10 months. Therefore, the trend in the backlog index shows that the rate of change in capacity utilization has bottomed and should start growing soon.
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: none
Decelerating Growth: automotive, textiles/clothing/leather goods
Accelerating Contraction: construction materials, custom processors, electronics/computers/telecommunications, food/beverage, furniture, plastic/rubber products, printing
Decelerating Contraction: aerospace, durable goods, forming/fabricating (non-auto), machinery/equipment, petrochemical processors, primary metals, wood/paper