The Fed released its I
ndustrial Capacity numbers a few hours ago. They are finally good and show an increase,
even after stripping out distortions which may have been caused by the Cash-for-Clunkers program. Here is the lead paragraph plus 2 illuminating charts from the release.
The first chart indicates how large the output gap is in total Industrial Production. The second chart shows only Equipment Utilization which is the critical sector for Gudovac and his readers. It is illuminating to see just how much business equipment has dropped in the US. The downward slope of the line is simply horrifying. Defense purchases have clearly propped up US equipment suppliers. Downward pressure on margins as well as tougher Terms and Conditions can be expected from Customers in orders being currently booked.Owners need to watch these indicators closely.
However, Gudovac is pleased to see some growth in Utilization. This indicates that we just maybe, possibly, perhaps have leveled out.
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
Industrial production increased 0.5 percent in July. Aside from a hurricane-related rebound in October 2008, the gain in July marked the first monthly increase since December 2007. Manufacturing output advanced 1.0 percent in July; most of the increase was due to a jump in motor vehicle assemblies from an annual rate of 4.1 million units in June to 5.9 million units in July. Excluding motor vehicles and parts, manufacturing production edged up 0.2 percent. The output of utilities fell 2.4 percent, reflecting unseasonably mild temperatures in July, and the output of mines increased 0.8 percent. At 96.0 percent of its 2002 average, total industrial production was 13.1 percent below its level of a year earlier. In July, the capacity utilization rate for total industry edged up to 68.5 percent, a level 12.4 percentage points below its 1972-2008 average.
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Don't Get Massacred !
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