Capacity Utilization Sees Fastest Growth since April 2015

(Positive) Durable goods capacity utilization was 76.7 percent in February 2017. The one-month rate of growth was 0.8 percent, which was fourth straight month of growth. The growth rate has accelerated each month. The annual rate of change contracted for the 14th straight month, but the rate of contraction decelerated for the fourth 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 eight months in a row. In February, the annual rate of change grew for the third 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: aerospace, construction materials, custom processors, food/beverage, furniture, plastic/rubber products, printing

Decelerating Contraction: durable goods, electronics/computers/telecommunications, forming/fabricating (non-auto), machinery/equipment, petrochemical processors, primary metals, wood/paper