Capacity Utilization for Durable Goods Contracts in December

Compared with one year ago, durable goods capacity utilization contracted 2.9% in December.

In December, durable goods capacity utilization was 75.2%, which was slightly below the average utilization for 2019. However, compared with one year ago, capacity utilization contracted 2.9%. This was the seventh month in a row and the eighth of last the nine months that capacity utilization contracted. Additionally, December’s month-over-month contraction was the second-fastest since August 2016.

The annual change in durable goods capacity utilization contracted at an accelerating rate for the second month in a row, falling from -0.2% to -0.7%. December was the fastest rate of annual contraction since May 2017. As the annual rate of change tends to lead capital equipment consumption by seven-to-10 months, capacity utilization is signaling accelerating contraction in capital equipment spending through at least the first half of 2020.

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

Accelerating Growth: electronics/computers

Decelerating Growth: aerospace, forming/fabricating (non-auto), machinery/equipment

Accelerating Contraction: automotive, custom processors, durable goods, furniture, petrochemical processors, plastics/rubber products, primary metals, textiles/clothing/leather goods, wood/paper products

Decelerating Contraction: construction materials, food/beverage processing, printing


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World Machine Tool Survey

An independent annual survey that collects statistics from machine tool consuming and producing countries and compares them in real U.S. dollars.

Capital Spending Survey

An annual survey that collects statistics regarding budgeted spending on machine tools, testing equipment, software and more.

Gardner Business Index

A diffusion index measuring month-to-month changes in activity at durable goods and discrete parts manufacturing facilities.