In May, durable goods capacity utilization was 74.4%. For the last five months, capacity utilization was running at a rate similar to the rate prior to the economic lockdown. Compared with one year ago, capacity utilization increased 26.2%, which was the second month in a row with growth faster than 26% and the third straight month of growth. Of course, this is mostly due to the easy comparison with last April’s low capacity utilization resulting from the lockdown of the economy.

The annual change in durable goods capacity utilization grew for the first time since June 2019. And, May had the fastest annual rate of growth since March 2019. The annual rate of change has clearly entered an accelerating growth phase. As the annual rate of change tends to lead capital equipment consumption by seven to 10 months, capacity utilization is signaling strong demand for capital equipment in the second half of 2021.

The GBI: Metalworking backlog index tends to lead the annual rate of change in capacity utilization by seven to 10 months. In May, the backlog index was above 60.0 for the third consecutive month, and above 50, indicating growth in backlogs, for the sixth straight month. The backlog index grew 84.5% compared with one year ago. This was the ninth straight month of growth. The annual rate of growth in backlogs accelerated for the third month in a row, indicating that the annual rate of change in capacity utilization should see accelerating growth in the second half of 2021.

Accelerating Growth: automotive, construction materials, custom processors, durable goods, electronics/computers, food/beverage processing, furniture, machinery/equipment, plastics/rubber products, wood/paper products

Decelerating Growth: 

Accelerating Contraction: 

Decelerating Contraction: aerospace, forming/fabricating (non-auto), petrochemical processors, primary metals, printing, textiles/clothing/leather goods