By Mark Pender
NEW YORK (MNI) – MNI’s U.S. capital goods index fell nearly three
points in the Dec. 16 period to 54.2, still above 50 to indicate growth
in year-on-year business conditions, according to the results of Market
News International’s weekly survey released Monday.
But year-on-year growth aside, MNI’s data point to a sequential
slowdown in the capital goods sector and point to November weakness for
nondefense capital goods data, including shipments, in Friday’s durable
goods report.
Sales growth in the sample, at a year-on-year +5.2%, is at its
slowest rate since the second quarter last year.
Weakness in Europe is a central factor behind the sales slowdown as
is, to a lesser extent, strength in the dollar with the benefit from
foreign exchange, at +2.0% for export sales, at its lowest level since
July.
Income is at a year-on-year -1.0% for the first negative reading
since the first quarter last year. Sample size in the period is 239
companies.
This week’s commentary highlight comes from Virco Manufacturing
(VIRC) which makes school furniture and is being hurt by limited public
spending at the local level: “Despite some encouraging individual
projects and stabilization of order rates in the third quarter, the
underlying challenges facing our market seem likely to persist for at
least one more delivery cycle. For this reason, we instituted the early
retirement program and other cost-savings initiatives in an effort to
return the company to profitability at reduced sales volumes.”
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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