–Q1 Proves Very Strong, Extending To Q2

By Mark Pender

NEW YORK (MNI) – Market News International’s weekly capital goods
index burst over 50 in the April 9 period, up nearly 10 points to 52.2
to indicate year-on-year growth for the U.S. industrial sector and
pointing to sequential growth for both the first and second quarters.

The jump reflects a run of favorable first-quarter
pre-announcements, a sampling boosted by new orders that may overstate
the sector’s output. The four-week average rose 5 points to 42.3 with
the 12-week average up 2.1 points to 37.0. Readings are the strongest of
the recovery.

Year-on-year sales, at +2.8%, show their first positive reading of
the recovery. Income is at +36%. But sample size is small at only 93
companies.

Nevertheless the latest period — together with prior periods —
point to strength for capital-goods readings in Thursday’s industrial
production report for March. But February exports of capital goods, data
to watch for in Tuesday’s international trade report, may not show
strength. Note that both the industrial production and international
trade reports measure shipments, which are currently lagging what has a
become a burst of new orders.

Below is a run of commentary and detail.

Specialty-materials maker Brush (BW) reports stronger-than-expected
demand across most of its markets including telecom infrastructure, data
storage, oil & gas, and aerospace. But the company does suspect that
much of this ongoing strength is due to inventory build, a build it
warns may fade through the second half of the year.

Capacitor-maker Kemet (KMT) ended a long run of disappointments,
saying business is showing strength and that lead times are extending.
The company is working with customers to ensure that supply is not
interrupted.

Sheet-molding composites maker Core Molding (CMT) expects some
improvement for the heavy-truck sector this year though it warns the
degree of improvement is uncertain. Navistar (NAV) is holding to its
2010 North American truck volume estimate for 195,000 to 215,000 units
vs. 2009’s 47-year low of 181,800.

There’s been a run of orders for products and systems tied to
renewable energy. Graham (GHM), a maker of vacuum & heat-transfer
equipment, is centered in the traditional refining industry, but sees
opportunities in geothermal, waste-to-energy, solar and cogeneration
projects.

Protective-coatings maker RPM International (RPM) reports strength
in its foreign industrial-flooring and industrial-coating markets vs.
weakness in its domestic commercial-construction markets. But the
company is upbeat, saying overall strengthening of the domestic economy
and improvement in infrastructure spending should begin to feed top-line
momentum.

Non-residential glass-products maker Apogee Architectural (APOG)
sees trouble over the next 12 months, warning its commercial
construction markets are showing signs of a longer-than-expected
downturn. The company has already worked off the majority of projects
that were booked when the market was stronger.

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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