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Capacity Utilization Contracts for 7th Month
The GBI Backlog index shows that the contraction in capacity utilization could end later this summer.
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(Negative) Durable goods capacity utilization was 75.6 percent in March 2016. The one-month rate of change, which was -0.5 percent in March, contracted for the seventh month in a row. The annual rate of change contracted at an accelerating rate for the third 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 for the second month in a row. The trend in the backlog index shows that the rate of change in capacity utilization could bottom out in the August or September time frame.
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: furniture;
Decelerating Growth: automotive; electronics/computers/telecommunications; printing;
Accelerating Contraction: aerospace; custom processors; durable goods; forming/fabricating (non-auto); machinery/equipment; petrochemical processors; plastics/rubber products; textiles/clothing/leather goods; wood/paper
Decelerating Contraction: construction materials; food/beverage processing; primary metals;
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