In July, durable goods capacity utilization was 75.8%, which was the highest rate of capacity utilization since March 2019. Compared with one year ago, capacity utilization increased 7.5%, which was the fifth straight month of growth. Of course, this is somewhat due to the easy comparison with last July’s low capacity utilization as the country was still exiting lockdowns.

The annual change in durable goods capacity utilization grew at an accelerating rate for the third consecutive month. And, July had the fastest annual rate of growth since February 2012. 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 and into 2022.

The GBI: Metalworking backlog index tends to lead the annual rate of change in capacity utilization by seven to 10 months. In July, the backlog index was above 60.0 for the fifth consecutive month. The backlog index grew 47.3% compared with one year ago. This was the 11^th straight month of growth. The annual rate of growth in backlogs accelerated for the fifth 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: aerospace, construction materials, custom processors, durable goods, electronics/computers, food/beverage processing, furniture, machinery/equipment, plastics/rubber products, primary metals, printing, textiles/clothing/leather goods

Decelerating Growth: automotive, wood/paper products

Accelerating Contraction: 

Decelerating Contraction: forming/fabricating (non-auto), petrochemical processors