In December, durable goods capacity utilization was 73.0%, which was the fifth month in a row that the rate of capacity utilization was above 70% and the highest rate of capacity utilization since February 2020. Compared with one year ago, capacity utilization contracted 2.9%, which was the slowest rate of contraction since February 2020. 

The annual change in durable goods capacity utilization contracted at an accelerating rate for the 14^th month in a row. December was the fastest rate of annual contraction since March 2010. As the annual rate of change tends to lead capital equipment consumption by seven to 10 months, capacity utilization is signaling a bottom in the annual rate of change in capital equipment about the second quarter of 2021.

The GBI: Metalworking backlog index tends to lead the annual rate of change in capacity utilization by seven to 10 months. In December, the backlog index grew 25.2% compared with one year ago. This was the fourth straight month of accelerating growth and the fastest rate of growth since October 2017. The annual rate of contraction in the Backlog index reached a bottom in June and has and has grown at an accelerating rate for four months, indicating that the annual rate of change in capacity utilization should see decelerating contraction for the next three to six months.

Accelerating Growth: 

Decelerating Growth: 

Accelerating Contraction: aerospace, durable goods, electronics/computers, forming/fabricating (non-auto), furniture, machinery/equipment, petrochemical processors, primary metals, printing, textiles/clothing/leather goods

Decelerating Contraction: automotive, construction materials, custom processors, food/beverage processing, plastics/rubber products, wood/paper products