By Mark Pender
NEW YORK (MNI) – MNI’s U.S. capital goods index picked up 1.5
points in the Jan. 20 period to 51.5, just above breakeven 50 to
indicate a slight increase in year-on-year business activity, according
to the results of Market News International’s weekly survey released
Monday.
But averages are still sloping downward with the 12-week average,
at 57.6, down for the 21st time in 22 weeks.
Sales growth, at a year-on-year +5%, is trending at a nine-month
low.
Threatening to push growth to zero is the strengthening trend of
the dollar. Held down by what it expects will be a 3% negative currency
effect, diversified manufacturer SPX Corp (SPW) sees sales rising only 1
to 5% this year. Last year, currency effects for this sample added 3% to
sales.
Durable goods on Thursday will fill out 2011 data for the capital
goods sector. For the last three Decembers, increasing output at
year-end has given non-defense capital goods shipments a big boost, of
3% and more.
But the quarter-to-quarter comparison looks almost certain to show
a slowing rate of growth. It would take a colossal monthly jump of 17.5%
in December for the fourth quarter to make up for the softness of
October and November.
Slowing in Europe is one of two pronounced factors affecting
growth: “Near-term uncertainty in Europe translated into more cautious
buying behavior at the end of the quarter resulting in lower fourth
quarter volumes and lower earnings than we previously expected,” said
chemicals maker Celanese (CE).
The second factor is flooding in Thailand. Power-chip maker
Fairchild Semiconductor (FCS) said effects from Thailand shaved
fourth-quarter sales by 2 to 3% and will shave first-quarter sales by
another 1%.
Income for the sample, at -3.0%, is trending at a one-year low.
Sample size in the period is 229 companies.
Editor’s Note: MNI compiles its capital goods index based on a
weekly sample of company news and data.
** Market News International New York Newsroom: 212-669-6430 **
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