Economic News Blog
Posted by: Steven Kline, Jr. 22. November 2019

Capacity Utilization Contraction Accelerates for Fifth Month

In October, durable goods capacity utilization was 74.1%, which was the slowest rate since August 2017. Compared with one year ago, capacity utilization contracted 3.6%. This was the fifth month in a row of accelerating contraction and the fastest rate of month-over-month contraction since May 2016.

Annual growth in capacity utilization of durable goods decelerated to 0.2% from 0.8% in October. That is down from its peak of 2.8% in January, and its slowest rate of change since July 2017 when the annual rate of change last contracted. As the annual rate of growth tends to lead capital equipment consumption by seven-to-10 months, capacity utilization is signaling machine tool orders will contract for the remainder of 2019 and into 2020.

The GBI: Metalworking backlog index  tends to lead the annual rate of growth in capacity utilization by seven-to-10 months. It has contracted since March and is indicating that capacity utilization will contract in 2020.

Accelerating Growth: 

Decelerating Growth: aerospace, durable goods, electronics/computers/telecommunications, forming/fabricating, machinery/equipment, primary metals

Accelerating Contraction: automotive, construction materials, custom processors, furniture, petrochemical processors, plastics/rubber product, printing, textiles/clothing/leather goods, wood/paper products

Decelerating Contraction: food/beverage processing,

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