Economic News Blog
Posted by: Steven Kline, Jr. 18. January 2016

Capacity Utilization Falls for Fourth Month

Durable goods capacity utilization was 75.8 percent in December 2015. The one-month rate of change, which was -1.4 percent in December, contracted for the sixth time in seven months. The last two months have contracted noticeably faster than previous months. The annual rate of change continued to grow, but the rate of growth decelerated for the ninth consecutive month. The annual rate of growth was its slowest since May 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 at an accelerating rate in October for the seventh month in a row. The trend in the backlog index shows that capacity utilization will likely contract well into 2016.

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 processingprinting; 

Decelerating Growth: aerospaceautomotiveconstruction materialscustom processorsdurable goodsforming/fabricating (non-auto)furniturepetrochemical processorsplastics/rubber productstextiles/clothing/leather goods 

Accelerating Contraction: electronics/computers/telecommunicationsmachinery/equipmentprimary metalswood/paper

Decelerating Contraction: none

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