Durable Goods Capacity Utilization Grows First Time since August 2015

(Positive) Durable goods capacity utilization was 75.9 percent in November 2016. The one-month rate of growth was 0.1 percent, which was the first month of growth since August 2015. The annual rate of change contracted for the 11th straight month, but the rate of contraction decelerated for the first time since it began contracting in January.   

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 five months in a row. The annual rate of change continued to contract, but was nearly flat in November. 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 likely bottomed out.

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: automotive, textiles/clothing/leather goods

Decelerating Growth: furniture

Accelerating Contraction: construction materials, custom processors, electronics/computers/telecommunications,petrochemical processors, plastic/rubber products, printing

Decelerating Contraction: aerospace, durable goods,  food/beverage, forming/fabricating (non-auto), machinery/equipment, primary metals, wood/paper