Economic News Blog
Posted by: Steven Kline, Jr. 16. March 2016

Capacity Utilization Contracts for 6th Month

Durable goods capacity utilization was 75.7 percent in February 2016. The one-month rate of change, which was 0.3 percent in February, contracted for the eighth time in nine months. February had the slowest rate of contraction in the last six months though. The annual rate of change contracted for the second month in a row.   

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 at a decelerating rate in February, ending a streak of nine straight months of accelerating contraction. The trend in the backlog index shows that the rate of change in capacity utilization could bottom out in the next seven to ten months.

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: automotivefood/beverage processingprinting;   

Decelerating Growth: aerospaceconstruction materialscustom processorsfurniturepetrochemical processorsplastics/rubber productstextiles/clothing/leather goods 

Accelerating Contraction: durable goodselectronics/computers/telecommunicationsforming/fabricating (non-auto)machinery/equipmentprimary metalswood/paper

Decelerating Contraction: none

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