May Capacity Utilization Grows After Contracting in April

Despite this growth, the annual rate of growth should continue to decelerate in the months ahead.

In May, durable goods capacity utilization was 75.6%, which was the second month in a row that capacity utilization was below 76%. Compared with one year ago, capacity utilization increased 0.9% after decreasing by 0.7% in April. April was the only month of month-over-month contraction since December 2016. 

Annual growth in durable-goods capacity utilization was unchanged at 2.2%. However, the annual rate of growth was down from its peak of 2.8% in January and its slowest rate of growth since July 2018. As the annual rate of growth tends to lead capital equipment consumption by seven to 10 months, it is signaling that capital equipment consumption will peak later this fall. However, machine tool orders appeared to have already peaked.

The GBI: Metalworking backlog index – an excellent leading indicator of capacity utilization in durable goods – indicated a peak in capacity utilization at the end of last year, as the annual rate of growth in backlogs peaked in October 2017. The backlog index tends to lead the annual rate of growth in capacity utilization by seven-to-10 months. Note in the chart that the last two times the growth rate in backlogs decelerated and crossed under the rate of growth in capacity utilization, the rate of growth in capacity utilization peaked in the next couple of months.

Accelerating Growth: aerospace, automotive

Decelerating Growth: durable goods, electronics/computers/telecommunications, forming/fabricating, machinery/equipment, petrochemical processors, primary metals, textiles/clothing/leather goods

Accelerating Contraction: construction materials, custom processors, food/beverage processing, furniture, plastics/rubber product, printing, wood/paper products 

Decelerating Contraction: 


Top Shops

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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.