August 2014 Economic Indicators

Melanie Garza - Director of Operations


Capital Expenditures are Rising

The U.S. Census Bureau, reports that new orders for durable goods have climbed to their highest level since 1992 in June. Up four of the last five months, new orders increase $5.7 billion or 1.1% over May. Durable goods orders are up 3.7% from a year ago.

Business investment in capital equipment is showing strong growth. Material handling equipment spiked up 19.8% over June and is 5.9% higher than a year ago. Turbines, generators and power generation equipment also peaked at 17.2% growth over the previous month and are 5.5% higher than in 2013. Orders for industrial machinery dropped significantly in June down 13.6% from May; however, it is up 27.5% from a year ago. Orders for metal working equipment also grew 3.4% in June.

Federal spending is also on the rise. Government investment in aircraft is up more than 25% from a year ago and climbed 11% in June. Federal spending in communication equipment grew 10.2%.

Consumer spending on automobiles remained flat in June.

Capacity Utilization Flirts with 80%

Capacity Utilization across all industries is showing 79.1%. Economists view 80% capacity utilization as a trigger for new construction. In June 2013, capacity utilization was 77.8% and since then, the index has continued to inch up hitting 79% for the first time in March 2014. Industrial capacity utilization is reflecting 77.1% capacity up from 76.9% last June.

Durable goods manufacturing capacity utilization posts solid numbers near 80%. Metals and fabricated metals have grown steadily since January from 75% for metals to 78.1% in June; and fabricated metals already at 80% utilization in January now sits at 81.7 percent. Industrial machinery is also rising steadily from 78.9% in January to 80.5% in June. Aerospace continues to gain momentum from 74.5% in January to 77.6% utilization in June.

Other notable manufacturing sectors that were above the 80% capacity level in June include: automotive at 80.3%, mining at 90%, paper at 82.5%, petroleum at 82.8% and electrical equipment at 84 percent.

High tech manufacturing capacity remains well below 80% at 71.4% in June.

Questions? Please contact Melanie Garza at mgarza@teamCOACT.com